Case Update: Court of Appeal Finds Unsecured Creditors Can Oppose Judicial Management Application


The Court of Appeal in the appeal involving Million Westlink Sdn Bhd (see the notes of proceedings of 21 July 2020 in the Court of Appeal Civil Appeal No. B-02(IM)-1590-08/2019) has confirmed that unsecured creditors have the right to be heard and to oppose the making of a judicial management order. The full grounds of judgment are not out yet.

This now overturns the earlier High Court decision in Million Westlink Sdn Bhd v Maybank Investment Bank Bhd & Ors [2019] MLJU 1721. The outcome of this Court of Appeal decision also appears to be similar to the High Court decision in Goldpage Assets Sdn Bhd (which I wrote about here).

When a company applies for judicial management, the company would be near insolvent. The company needs rescuing and an orderly dealing with its creditors. Hence, this Court of Appeal decision is important in clarifying that unsecured creditors have a right to appear and, if necessary, to oppose the making of the judicial management order.

Case Update: Receivers Can Seek For Continuation of Essential Supplies

The Court of Appeal in Boulevard Plaza Sdn Bhd v Gas District Cooling (Putrajaya) Sdn Bhd [2019] MLJU 1965 allowed the receiver and manager’s application to compel a chilled water provider to continue with the supply of chilled water to the company under receivership. This is a far-reaching ability to compel the continuation of certain essential supplies. This decision would also apply to the situation of a judicial manager seeking for the continuation of such supplies.

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UK’s Corporate Insolvency and Governance Bill: Possible Reforms for Malaysia’s Restructuring Laws

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.

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Company in Distress: Insolvency Issues relating to Employees

Under Malaysia’s movement control restrictions and with COVID-19, companies are facing cash-flow issues and financial difficulties. With the employers facing such difficulties, the employees may also face salary cuts (for example, see this news report) or retrenchment. Companies may then slip closer towards financial distress and may have to pursue restructuring and insolvency options. This article sets out the insolvency issues relating to employees.

I set out the different scenarios where a company in distress may pursue a scheme of arrangement, apply for judicial management, end up placed in receivership or is compulsorily wound up. I touch on how these scenarios will affect the rights of employees. Continue reading

How to Qualify as a Liquidator in Malaysia

Qualified persons can now apply to be licensed as liquidators, or also known as insolvency practitioners, in Malaysia. This allows for the licence holder to take on appointments as: (i) liquidator; (ii) receiver or receiver and manager; (iii) judicial manager; and (iv) a nominee in a corporate voluntary arrangement.

The Accountant General of Malaysia recently issued its Guidelines for Qualification as Liquidator under the Companies Act 2016 (CA 2016) dated 21 January 2020 (only available in the Malay language). This now allows for qualified persons to apply for a liquidator licence under the CA 2016.

I write about the past qualification route for liquidators under the Companies Act 1965 (CA 1965) and this new qualification regime under the CA 2016. Continue reading

Companies Amendment Act 2019 comes into force on 15 January 2020

The Companies (Amendment) Act 2019 will now come into force on 15 January 2020. This makes the first set of amendments to the Companies Act 2016.

The enforcement date was gazetted through P.U. (B) 16/2020. On the same date of 15 January 2020, the Companies (Company Auditor and Liquidator Fees) Regulations 2020 will also come into force (see P.U. (A) 9/2020).

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