The High Court in its grounds of judgment dated 10 June 2020 in Goldpage Assets Sdn Bhd v Unique Mix Sdn Bhd held that unsecured creditors can intervene in a judicial management application. The unsecured creditors’ views can then be heard in opposing the making of the judicial management order. This is an important decision clarifying this often argued point.
COVID-19 has had a devastating impact on jobs around the world. Almost every country has experienced an economic downturn, and as businesses struggle to steady the ship and stay afloat, many employers have been doing their best to retain their employees where possible. It has been a very busy 2020 for employment lawyers and HR professionals.
Unfortunately, for employers in many industries, COVID-19 has negatively affected their revenues too significantly, and cutting jobs has become the only solution to keep the businesses going. This has also been the case in Malaysia, where the Movement Control Order crippled many businesses, and the government has been unable to provide meaningful assistance to employers. For example, the aid provided under the Prihatin wage subsidy program is very low and short-term compared to other countries, and comes with conditions attached that make it impractical for many employers.
As a result, there have already been many retrenchments carried out in Malaysia, with even more to come. Indicative of the times, in the past couple of months, we have suddenly seen a significant amount of traffic on an old article I published here in January 2016 — “What you need to know about the law on retrenchment of employees”.
But retrenchments can be tricky. Over the years I’ve seen many employers make mistakes that result in unfair dismissal claims, a messy and costly court process, and sometimes very big court awards to be paid to former employees. Often, these mistakes are made even by employers who have done their research on the law, and sometimes even by those who have obtained legal advice (which ultimately turned out to be incomplete or flawed).
Knowing how to properly carry out a retrenchment exercise — and knowing what practical mistakes and missteps to avoid — comes with experience. It also helps greatly to analyse how other businesses have implemented retrenchments (both properly and improperly), and so in this article I set out very brief summaries of a selection of retrenchment-related decisions by the Industrial Court in the past year.
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.
I have been invited to speak on a Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) webinar on Rescue Options for Companies in Distress. It is on Wednesday 20 May 2020 from 10am to 12pm. My co-speaker is Ms Khoo Poh Poh from EY. MAICSA members pay RM60 while non-members pay RM90. The registration form is here.
Description of the talk: With the rise of COVID-19 and the aftermath of the Movement Control Order, companies are facing uncertainties in handling the challenges that lies ahead. The International Monetary Fund warned that the world faces its worst recession since the Great Depression of the 1930s. It is therefore critical to understand the rescue options available and the risks for business owners when taking on increasing debt when continuing to operate.
Learn the practical considerations when assessing rescue options, cashflow considerations and working out a restructuring proposal. This webinar will also cover the recent temporary changes to the winding up laws.
I have been invited to speak as part of the Malaysian Institute of Accountants webinar series. My session is on Thursday 14 May 2020, 10.30am to 11.30am. It is titled ‘Red Alert: Directors’ Responsibilities in the Zone of Insolvency’.
I will cover the follow areas:
- Directors’ duties when a company approaches insolvency.
- The risk of insolvent and fraudulent trading.
- The need to consider restructuring and winding up options.
- Pros and cons of each option.
This is a free webinar but prior registration is required. Please email: [email protected] to register.
On Friday 8 May 2020, I will be moderating a webinar organised by the Asian International Arbitration Centre. The title is “Statutory Rescue: Whether Introducing a COVID-19 Act Can Save the Economy?” This is a free webinar and you can email: [email protected] to register for the Zoom webinar or you can view it on AIAC’s Facebook page.