Lee Shih and Peyton Teo continue with key trends in judicial management in Malaysia.
We continue with Part 2 of a three-part series on the key trends in judicial management (JM) cases in Malaysia.
In Part 1, we had covered the reported cases on JM, the debtor and creditor applicants for JM, a Labuan company applying for JM, public listed companies, and the need for full and frank disclosure.
We continue with other issues arising from Malaysia’s JM cases.
Lee Shih and Peyton Teo summarise some key trends in judicial management in Malaysia.
Judicial management (JM) is part of Malaysia’s corporate rescue mechanisms that came into force on 1 March 2018. Three years on, we set out the JM trends in our three-parter series of articles.
JM is a court-supervised rescue mechanism aimed at rehabilitating financially distressed companies. A court-appointed insolvency practitioner is empowered to manage the distressed company’s affairs, business and property. This insolvency practitioner is known as a judicial manager.
Once appointed, the judicial manager would prepare and table a statement of proposal for the creditors to vote on. The purpose of this is to either resuscitate the company and to continue as a going concern or alternatively, work towards a more advantageous realisation of the company’s assets than in a winding up for the benefit of its creditors.
The filing of a JM application triggers an automatic moratorium on all legal proceedings against the company. This gives breathing space to a financially distressed company to focus on its restructuring efforts to pivot back towards financial viability.
Today was the second day of the Malaysia Insolvency Conference 2021. I had a very engaging session with my fellow speakers, Alex Chiang of Rodgers Reidy and Eddie Goh of Deloitte. The session was titled Lessons from Recent Landmark Cases. The session was a blend of practical issues and legal changes from recent court decisions.
At the session, I promised to set out a summary of the cases and legal principles I referred to. I set them out here.
The Singapore High Court decision in Re HTL International Holdings Pte Ltd [2021] SGHC 86 dealt with an unfair prejudice claim made against judicial managers. The decision confirms the high threshold to show the decision of the judicial managers was plainly wrong, unfair or perverse. This decision is very persuasive authority for Malaysia judicial management law. Continue reading
Scomi Group Bhd, listed on the Main Market of Bursa Malaysia, has applied for judicial management. This provides Scomi Group with a moratorium from legal proceedings and is part of its financial restructuring plan. This case also raises interesting legal issues. Continue reading
Wong Li Qi writes a case update on a Singapore High Court decision on the interaction between the judicial manager’s powers and the directors’ residuary powers of management.
The Singapore High Court in Ocean Tankers (Pte) Ltd v Rajah & Tann Singapore LLP [2021] SGHC 47 dealt with the standing of directors to bring an action on behalf of the companies after interim judicial managers were appointed.
