The High Court in its grounds of judgment dated 10 June 2020 in Goldpage Assets Sdn Bhd v Unique Mix Sdn Bhd held that unsecured creditors can intervene in a judicial management application. The unsecured creditors’ views can then be heard in opposing the making of the judicial management order. This is an important decision clarifying this often argued point.
The Federal Court in its grounds of judgment dated 21 May 2020 Dubon Berhad (in liquidation) v Wisma Cosway Management Corporation held that fees due to a management corporation or a joint management body under the Strata Management Act is not a secured debt. Such fees are a pure unsecured debt within the insolvency regime. This will bring clarity for a liquidator of a company which is an owner of a strata property.
I have been invited to speak at the Malaysian Institute of Accountants‘ webinar on Wednesday 17 June 2020. It is titled Reliefs and Risks for Companies and Directors: COVID-19 Temporary Measures. My co-speaker is Kenneth Foo, both of us being the authors of Companies Act 2016: The New Dynamics of Company Law in Malaysia. Here is the registration form for the two-hour webinar. Fees are RM150 for MIA members and RM195 for non-members.
This seminar will cover all the common practical issues for companies arising from the movement control restriction. With the heightened risk of solvency-related issues, directors must also be aware of their responsibilities and the risks of personal liability.
This is a guest post by Gerard Tang and Tan Hei Zel. It is one of the 3 articles selected to be published on TML following our open call for submissions. We would like to thank everyone who sent in their articles. We hope to see more quality legal writing published, which will hopefully lead to vibrant discussions and thought leadership in the Malaysian legal industry.
The Companies (Exemption) (No. 2) Order 2020 (“Order”) has provided temporary reprieve from winding-up proceedings. The Order, issued by the Minister of Domestic Trade and Consumer Affairs (“Minister”), has extended the time frame to respond to a statutory demand up to six months. However, this article explains how the Order is potentially ultra vires and flawed.
The Order exempts all companies from section 466(1)(a) of the Companies Act 2016 (“Act”). Section 466(1)(a) provides for a statutory presumption of insolvency of a company where:
(a) the company is indebted in a sum exceeding the amount prescribed by the Minister;
(b) a notice of demand for the debt is served on the company; and
(c) the company fails to pay the debt within 21 days after service of the notice.
The exemption is applicable to notices served between 23 April 2020 and 31 December 2020. This exemption is subject to the condition that a company shall pay its debt within 6 months after service of the notice (“Condition”). This is a timely measure to tide businesses over during the economic downturn and a creative use of the exemption provision in the Act. However, we argue that the Order is potentially ultra vires and flawed. Continue reading
In response to COVID-19, the UK has fast-tracked its Corporate Insolvency and Governance Bill (the PDF copy of the Bill is here and with helpful Explanatory Notes). The overarching objective of this Bill is to provide businesses with the breathing space they need to continue trading during this difficult time and to avoid insolvency. I set out seven of the key measures that UK is introducing and the possible reforms that Malaysia can adopt.
I have been invited to speak on a Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) webinar on Rescue Options for Companies in Distress. It is on Wednesday 20 May 2020 from 10am to 12pm. My co-speaker is Ms Khoo Poh Poh from EY. MAICSA members pay RM60 while non-members pay RM90. The registration form is here.
Description of the talk: With the rise of COVID-19 and the aftermath of the Movement Control Order, companies are facing uncertainties in handling the challenges that lies ahead. The International Monetary Fund warned that the world faces its worst recession since the Great Depression of the 1930s. It is therefore critical to understand the rescue options available and the risks for business owners when taking on increasing debt when continuing to operate.
Learn the practical considerations when assessing rescue options, cashflow considerations and working out a restructuring proposal. This webinar will also cover the recent temporary changes to the winding up laws.