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 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).
The amendment Bill will make amendments to the Companies Act 2016 (CA 2016). I have since updated this article to take into account the Parliamentary debate of the amendment Bill.
I highlight seven of the more significant amendments. There will be welcome clarification of the effect of section 66 on the execution of what sort of documents, as well as the redemption of preference shares out of capital. But I can see issues relating to the appointment of receivers or receivers and managers after liquidation. There is a severe dilution of the ability to apply for judicial management.
#1: Section 66 to Only to Apply to Specific Types of Documents
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 →
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.
The Malaysia Insolvency Conference 2018 will be held this Thursday 22 November 2018. I am organising the case study session where it will feature a hypothetical judicial management case study. It is still not too late to sign up for the conference.
There is a strong lineup of speakers: The Honourable Judicial Commissioner Puan Wong Chee Lin, Melisa Tai of Adnan Sundra & Low, and Koo Yin Soon of Shearn Delamore & Co. The two speakers will take on the role of opposing counsel for and against a judicial management application. The Judicial Commissioner will then hear arguments, pose questions and then decide on the application. The counsel have already prepared their skeletal submissions and filed it before the Judicial Commissioner.
As a sneak preview, here are the background facts for this case study of the fictional Photon Bhd and how the company applies for judicial management. Will the judicial management application succeed? Will Photon Bhd rise again? Continue reading →