Lee Shih and Peyton Teo summarise some key trends in judicial management in Malaysia.
Introduction
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.
