5     How does Corporate Voluntary Arrangement (CVA) work against  the  Unsecured Creditors Please click here for more information on the upcoming seminars to be presented on the above topics, organised by Legal Logic Asia, MIA, MAICSA and other organisers. Overview of the insolvency reforms made by the Companies Act 2016. The South African Companies Act 46 of 1926 introduced judicial management as a statutory corporate rescue procedure for companies to be used before liquidation, where appropriate. Not surprisingly, it is  also at this stage of proceedings that a company may seek an ex-parte order to restrain creditor actions, and this provision was for a time, notoriously misused to achieve temporary reprieve from creditor actions. A meeting of creditors and members must then be convened by the nominee and the required majority to approve a proposal is 75% of the total value of creditors present and voting, and a simple majority of the members present and voting, either by a show of hands or by poll, if demanded. These mechanisms will allow financially distressed companies to restructure its debts and to continue … additional controls on court sanctioned schemes of arrangement to make this process more effective as a means of effecting a corporate debt restructuring. A judicial management order directs that the affairs, business and property of the company be managed by the judicial manager for the period in which the order is in force, which is 6 months with the possibility of a further 6 month extension. The right of secured creditors to veto applications for judicial management orders further diminishes the effectiveness of the new regimes in rehabilitating distressed companies. The fundamental difference is that the implementation of the debt restructuring proposal will be supervised by an insolvency practitioner with minimal court supervision. The scheme of arrangement procedure in the Companies Act 2016 imposes two key improvements to prevent the abuse of the moratorium provisions : Some reflections on the insolvency reforms. Duty to co-operate with judicial manager 54. The statute does not impose a  time frame for implementation of a voluntary arrangement, but the moratorium ends on the day the meeting of creditors is called and can only continue to remain in place for a period of up to 60 days with the consent of 75% majority in value of creditors present at the meeting of creditors. 5.2     Who is a qualified insolvency practitioner (section 394 of the Act) 53. This is on the basis that an independent liquidator will be able to adopt a more objective assessment of the commercial viability of a proposed scheme, and accordingly provide necessary assistance to the Court. The Malaysian High Court recently delivered the very first grounds of judgement in relation to judicial management in Leadmont Development Sdn Bhd v Infra Segi Sdn Bhd & Another Case 10 CLJ 412. 6.4     A judicial management order granted by the Court will remain in  force for how long? Alex Chang & Co Penyewa Tidak Bayar Tunggakan; Pengusiran; Bolehkah Polis Membantu? The Companies Act 2016 also allows the Court to appoint an approved liquidator to assess the viability of the scheme of arrangement proposed and prepare a report for submission to the meeting of creditors and members. A JUDICIAL MANAGER FOR COMPANIES IN THE RED If a majority in number representing 75% in value of the creditors or class of creditors  present and voting approves the scheme, the company may then report this result to the Court in a subsequent application to the Court for approval of the scheme. Given the substantial overhaul of the Companies Act 1965 and the protracted period of consultation before the Companies Act 2016 was finally passed, the Companies Act 2016 does represent a missed opportunity for an even more comprehensive update of the corporate insolvency framework in Malaysia. (1) This Act may be cited as the Companies Act 2016. The passing of the Malaysian Companies Bill 2015 (Companies Act 2016), which will replace the Companies Act 1965 (Companies Act 1965), marks the most comprehensive legislative change in Malaysia’s corporate law in 50 years. Recognizing the inadequacy of existing provisions to facilitate the rehabilitation of companies, reforms in the Companies Act 2016 include the introduction of two key features: The other provisions affecting insolvency law and practice in the Companies Act 2016 codify certain established common law principles applicable in insolvency and increase penalties and threshold amounts. Predeep Nambiar - June 29, 2020 11:54 AM. A debt restructuring scheme under section 176 of the Companies Act 1965 generally involves a compromise proposed between a company and its creditors or any class of them. When judicial management was introduced into South African companies' legislation in 1926, it was unique to South Africa. The Companies Bill 2015 will introduce two corporate rescue mechanisms: corporate voluntary arrangement and judicial management. 7.1     Joint Venture Agreements Get Out Clause and the Recent the Federal Court 2016 Decision, 7.2     Interpretation of word “and” by the Court in section 223 Companies Act 1965 (new section 472). Schemes of arrangement are not exclusively intended for insolvent companies and are widely utilised by solvent entities. 55. T Tenancy Act of the Kingdom of Bhutan, 2004 (English/Dzongkha) Tenancy Act of the Kingdom of Bhutan, 2015 (English & Dzongkha) The Companies Act of Bhutan, 2016 (English & Dzongkha) The proposal for a corporate voluntary arrangement has to be accompanied by a statement of an insolvency practitioner who has agreed to act as a nominee indicating whether or not, in his or her opinion, the debt restructuring proposal has a reasonable prospect of being approved and implemented and whether the company is likely to have sufficient funds available for the company during the proposed moratorium to enable the company to carry on its business. How will the Judicial Manager and Corporate Voluntary Arrangement affect the Recovery of your Million Dollars Debts as an Unsecured Creditors. BANKING (SPECIAL RESOLUTION REGIME) ACT 2016 2016 : 1 TABLE OF CONTENTS DIVISION 1 SPECIAL RESOLUTION REGIME Part 1 Preliminary Citation Interpretation: general Part 2 Special Resolution Framework Special resolution regime application Financial assistance Special resolution objectives Code of practice and procedure Part 3 Exercise of Powers: General General conditions … Partner, Wong & Partners The use of the scheme of arrangement became synonymous with corporate rescue measures in the 1997 financial crisis in Malaysia when financially distressed companies frequently used the restraining order provisions in section 176 to secure extended judicial protection from creditor actions. That said, in drafting the bill that culminated in the Companies Act 2016, the Companies Commission of Malaysia had set out to achieve many objectives, and the introduction of alternative corporate rescue mechanisms as one of the 19 policy statements and guiding principles is certainly welcome. ... Case management in civil cases; Judgment writing; The Companies Act 2016 : Transforming the corporate landscape; Defamation Law; Criminal Law: Evidence and Procedure; Damages Part II - Tort; Induction programme for Judicial Commissioners Program Induksi … Judicial Management •Judicial Management order granted in terms of Companies Act Chapter (24:03) Sections 299 –314 •High Court appoints a Judicial Manager •JM assumes management of the company •JM Empowerment to investigate the affairs of the entity •JM identifies the reasons why the company was not successful 3     Since the new Act is not in force yet what must the  Unsecured Creditors do  now? 6.5     What actions cannot be taken against the Company during the  judicial management? If the scheme does not also involve any arrangement between the company and its members, there is no requirement for a vote by the members. For example, in the consultation paper released by the Corporate Law Reform Committee prior to the drafting of the Companies Act 2016, there was no consideration as to whether Malaysia ought to adopt some form of the UNCITRAL Model Law on Cross Border Insolvency, which would have made it one of the first countries in this region to do so. Judicial Management. It however means the management of a company by a person appointed by the Master of the High Court in terms of the provisions of the Companies Act, subject to the supervision of the High Court. 2.2     Will show you  how to get paid ahead of the Bankers. This article will explain what is Judicial management and how can a company be put under judicial management in Singapore. 5.4     What can the creditors do during the Moratorium period? Under existing Malaysian insolvency laws, the usual outcome in the event of corporate insolvency is receivership or liquidation. Detailed discussion of the insolvency reforms made by the Companies Act 2016. The Companies Act 2016 is anticipated to come into effect in late 2017. the moratorium that would be in place from the time an application is made for a judicial management order until the grant or dismissal of the order. There is general agreement that judicial management was a good idea in theory but that, in practice, for a company to be put under judicial management usually turned out to be the kiss of death. Detailed discussion of the insolvency reforms made by the Companies Act 2016, Judicial management allows a company, its directors or a creditor, to apply to the Court to place the management of the company in the hands of a qualified insolvency practitioner known as a “judicial manager.”. 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