Case Update: Court Allows KNM to Convene Scheme Meeting but Rejects Restraining Order

In the latest chapter of KNM Group’s high-stakes restructuring, the High Court has allowed the company to proceed with its fifth scheme of arrangement proposal. However, the Court declined to grant a restraining order, which would have given KNM a moratorium on legal proceedings filed against it.

This is one of the first reported decisions on the amended scheme of arrangement provisions. The decision deals with repeat restructuring attempts, related-party creditor classification concerns, and the ‘VC George Test’ for the grant of restraining orders.

I briefly analyse the decision of Judicial Commissioner Tuan Saheran Suhendran in his Grounds of Judgment dated 12 March 2025. I had earlier set out the legal framework for the amended scheme of arrangement and restraining order.
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BFM Radio Interview on Cross-Border Insolvency

 

On 24 April 2025, I spoke on the BFM radio station to speak on recent developments in the field of insolvency. First, with Malaysia’s intention to adopt the UNICTRAL Model Law on Cross-Border Insolvency through the Cross-Border Insolvency Bill. Second, the challenges of recovering overseas assets. Third, the rise of voluntary bankruptcies in Malaysia.

Set out below is an extract of one of the questions and my answer.

Why is it important for Malaysia to have specific laws on cross-border insolvency, especially on the business front?

Right now, Malaysia doesn’t have clear laws to recognise foreign insolvency proceedings. That’s a gap. But with the proposed Cross-Border Insolvency Bill, I believe it offers a strong economic selling point.

Malaysia is already open for business — we welcome foreign investment, and we make it easy to set up operations. But we also need to give foreign companies confidence that if they undertake a foreign restructuring or foreign insolvency, their Malaysian assets are protected and can be dealt with smoothly for repayment of debts.

This means certainty — certainty to operate here, even during foreign distress, and certainty that property can be repatriated or recovered efficiently.

Think of it this way — Malaysia welcomes foreign companies through special economic zones and secondary listings on Bursa Malaysia. If the company undergoes a restructuring or a liquidation, the Cross-Border Insolvency Bill ensures there’s a clear, predictable path to wind things down.

You can listen to the full 10-minute podcast on the BFM website.

Case for Malaysia to adopt Model Law on Cross-Border Insolvency

On 14 April 2025, The Edge Malaysia published our piece on why Malaysia should adopt the UNCITRAL Model Law on Cross-Border Insolvency. I reproduce the article below. Continue reading

Ex Parte Interim Judicial Manager Appointed Over Listed Company

Financially-distressed public listed company, Sarawak Cable Berhad, is placed under interim judicial management. Its former lawyers obtained an ex parte order to appoint an interim judicial manager over the company.

With the amendments to the Companies Act 2016, this is the first instance of a judicial management application being applied to a listed company.

I have had a read of the judicial management court papers and also read the various Bursa announcements to piece together the following chronology.

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Firing Up and Cooling Off the Restraining Order in Schemes of Arrangement

The Companies (Amendment) Act 2024 came into force on 1 April 2024. With the amendments, we see a strengthening of the restructuring and corporate rescue laws of Malaysia.

Among the different corporate rescue tools, schemes of arrangement had already been the most-used mechanism in Malaysia. The scheme of arrangement allowed for the Court to grant moratorium protection known as the restraining order.

Here, I analyse the changes and challenges relating to the restraining order arising from the new amendments to the Companies Act 2016 (CA 2016).

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Case Update: Court of Appeal Confirms Liquidator Cannot Grant Sanction for Legal Proceedings

On 16 November 2023, the Court of Appeal in Oren Venture Sdn Bhd v Small Medium Enterprise Development Bank Malaysia Berhad (Court of Appeal Civil Appeal No. W-02(IM)(MUA)-587-04/2022) upheld the High Court decision (reported at [2022] 12 MLJ 247 and where I had written about it here).

Set out below is the extract from the Court of Appeal cause list website and with the Court setting out the brief grounds of decision (in the Malay language only). The full written grounds of decision do not appear available yet. I may write a fuller update once I have read the written grounds.

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