Whither the Schemes of Arrangement in Malaysia with the arrival of the corporate rescue mechanisms?

Abstract

The main features incorporated in the Schemes of Arrangement (SOA) in Malaysia under the Companies Act 2016 were designed over more than a century ago. For the first time, the company law framework has embraced corporate rescue laws with the introduction of two tailor-made corporate rescue mechanisms, Corporate Voluntary Arrangement and Judicial Management. This paper argues that the SOA, notwithstanding the presence of the corporate rescue mechanisms, may still be employed to achieve the objective of advancing corporate rescue for financially distressed private companies in Malaysia.

Rehabilitation of abandoned housing projects in peninsular Malaysia: reaching out to rescue mechanisms in the companies act 2016

“…The main features of the SOA under the CA 2016 are replicated from the SOA version under the CA 1965. The framework of the SOA under the CA 2016, similar to that for the CA 1965, remains largely “barebone”, that is, bereft of provisions on creditors’ meetings, rules for proof of debts and to resolve disputed debts; and duties for chairperson of meetings (Chen et al , 2020b, pp. 542 and 554).…”

“…The sanctioned proposals are then binding on all creditors and members including the dissentients (CA 2016, Section 366(3)). During the application to the court, it is usual to also seek an order of the court to restrain further proceedings or actions against the company pursuant to Section 368 of the CA 2016 (Chen et al , 2020b, pp. 543-544).…”

“…The scheme company bears the burden of placing the creditors into the correct class of creditors. In multiple classes of creditors, it must secure the requisite majority votes in each of those classes (Chen et al , 2020b, p. 550). The test for classification of creditors was formulated in Sovereign Life Assurance Company v Dodd (1892) 2 QB 573, p. 583, that is, a class “must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest”.…”

Methodological Considerations in the Professional Accreditation Research

“…This step-by-step process helps clarify critical constructs in the BRPs' PAF from PI results. Chen et al (2020), Pandit (2000), and Schweizer and Nienhaus (2017) recommended qualita-tively generated data to improve the understanding of business rescue practices.…”