insolvency

Restraining Order under a Scheme of Arrangement Must Satisfy Pre-Conditions from the Start

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An applicant must meet the statutory pre-conditions for the grant of a moratorium (otherwise known as a restraining order) under Malaysia’s scheme of arrangement even at the initial application stage. This was decided in a recent High Court decision dated 22 April 2019. The Court set aside the initial grant of the restraining order as the applicant companies had not satisfied the pre-conditions at the time of the application.

To my knowledge, this is also the first decision on this issue under the new section 368(2) of the Companies Act 2016 (CA 2016). There have been conflicting High Court decisions on this issue when interpreting the predecessor section 176(10A) of the Companies Act 1965 (CA 1965). The full grounds of judgment have not been issued yet.

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Case Update: Creditor can Issue a Winding Up Notice based on a Mere Adjudication Decision

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The Court of Appeal in Likas Bay Precinct Sdn Bhd v Bina Puri Sdn Bhd [2019] MLJU 49 has decided that a petitioner can issue a statutory demand for winding up based on a mere adjudication decision. There is no requirement to first enforce the adjudication decision as a court judgment before issuing such a winding up notice.

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Case Update: Court of Appeal on Staying the Dismissal of Judicial Management Application

Lee Shih1 Comment

The Court of Appeal in the Wellcom Communications case has decided on certain significant issues relating to a judicial management application (see the grounds of judgment dated 13 February 2019). This is Malaysia’s first appellate decision relating to judicial management.

In summary, upon the filing of a judicial management application, an automatic moratorium applies. This will stay all legal proceedings from continuing or from being commenced against the applicant company. The Court of Appeal has held that once the judicial management application is dismissed, there cannot be a grant of any stay order to stay the dismissal of the application in order to revive the moratorium effect. Continue reading →

Case Update: Federal Court Confirms Jurisdiction to Set Aside a Winding Up Order

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The Federal Court in grounds of judgment dated 22 November 2018 in the SKS Foam decision confirmed the Court’s jurisdiction to set aside a perfected winding up Order in certain limited instances.

The Court is able to exercise its jurisdiction under the Federal Court case of Badiaddin to set aside its own Order where the defect is of such a serious nature that there is a need to set aside the Order in the interests of justice. Continue reading →

Corporate Rescue in Malaysia: Relevant Documents for Corporate Voluntary Arrangement and Judicial Management

Lee Shih1 Comment

For those involved in the restructuring and insolvency field, I thought it would be useful to set out all the relevant provisions, subsidiary legislation and documents for the corporate rescue mechanism in Malaysia. Corporate rescue under the Companies Act 2016 is corporate voluntary arrangement and judicial management.

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