The coronavirus pandemic gives rise to the major risk of companies and small businesses going insolvent. In this article, I set out the restructuring and corporate rescue options for businesses in Malaysia. For example, companies can pursue the corporate rescue mechanisms under the Companies Act 2016. For small businesses who are sole proprietors, they may face bankruptcy. These individuals consider the voluntary arrangement under the Insolvency Act 1967.
I set out a case update on the Federal Court decision of Tee Siew Kai v Machang Indah Development Sdn Bhd (see the Grounds of Judgment dated 17 February 2020). The decision is on the law applicable to the grant of leave to sue a liquidator in his personal capacity. This decision reverses the Court of Appeal decision in Tee Siew Kai (as liquidator for Merger Acceptance Sdn Bhd) (in liquidation) v Machang Indah Development Sdn Bhd (in liquidation) (previously known as Rakyat Corp Sdn Bhd [2019] 2 MLJ 514.
This decision reiterates the importance of leave of the Court in order to avoid wasteful litigation against liquidators and to preclude unwarranted interference with the winding up process. There must be a prima facie case made out, the Court must evaluate the evidence to see if this has been met, and pecuniary loss suffered by the company must be shown. Continue reading
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
On 20 June 2019, I will be speaking at the Companies Commission of Malaysia Training Academy (COMTRAC) session on Cessation of Companies and Limited Liability Partnerships. This one-day seminar is held in Kota Kinabalu, Sabah. You can still sign up for the seminar, and with the registration fee at RM500 or discounted to RM400 for licensed secretarties, and for members of MAICSA, MIA, the Malaysian Bar, MACS, MICPA, Sabah Law Association and the Advocates Association of Sarawak.
My co-speaker is Puan Norhaslinda Salleh. She is the Head of Insolvency in the Registration Services Division, Companies Commission of Malaysia. Continue reading
The Malaysian Courts continue to tackle the issue of the effect of an arbitration agreement on the litigant’s ability to present a winding up petition based on a debt. This is in the context of a purported debt arising from a contract containing the arbitration clause. There have been conflicting High Court decisions on this point, especially on the issue of whether the Court can stay the winding up pursuant to section 10 of the Arbitration Act 2005 (AA 2005).
The recent High Court decision in Awangsa Bina Sdn Bhd v Mayland Avenue Sdn Bhd (Grounds of Judgment dated 2 May 2019) decided that it would not stay the winding up proceedings under the AA 2005. Nonetheless, the Court agreed with the authorities from the UK, Singapore and Hong Kong to apply the test of whether there is a prima facie dispute of the debt. Since there was, the winding up petition was dismissed. The decision provides a useful summary of the cases in Malaysia and other jurisdictions. Continue reading
On 14 May 2019, I spoke at the Asset Recovery Asia Conference in Singapore. It was organised by Knect365 as part of its Asset Recovery series. I thoroughly enjoyed attending the conference, hearing from other fraud and asset recovery specialists, and meeting new friends.
I shared a panel with other lawyers from different jurisdictions, an investigator and a litigation funder to share our perspectives. The session was on how victims of fraud have to make a decision early on, without all the facts, about which recovery route to go down – litigation or insolvency proceedings. These strategic decisions can have implications on the remainder of the case. I set out below some of the views I shared on the panel session. Continue reading
