JUDICIAL MANAGEMENT

Judicial management shall not apply to companies regulated under the law enforced by the Central Bank of Malaysia and companies subject to the Capital Markets and Services Act 2007.

An application for an order that a company should be placed under a judicial management and for an appointment of a judicial manager who is an insolvency practitioner (in accordance with Section 407 of the Companies Act 2016) may be made to the Court by the company or its creditors’ if the company or its creditors’ consider that the company will be unable to pay its debts (as described in Section 466 of the Companies Act 2016) and there is a reasonable probability of rehabilitating the company or of preserving all or part of its business as a going concern or that otherwise the interest of the creditors would be better served than by resorting to a winding up.

Upon hearing the application for a judicial management order, the Court may dismiss the application or adjourn the hearing conditionally or unconditionally or make an interim order or any other order that the court thinks fit. Any judicial management order made under Section 405 (1) of the Companies Act 2016 shall direct that during the period in which an order is in force, the affairs, business and property of the company shall be managed by a judicial manager appointed by the Court.

A judicial management order shall remain in force for a period of Six (6) months from the date of the making of the order, unless the judicial management is otherwise discharged. The Court may, on the application of the judicial manager, extend the period for another Six (6) months.

The effect of an application for a judicial management order and the effect of a judicial management order are laid down in Section 410 and 411 of the Companies Act 2016 respectively. Subject to Section 414 of the Companies Act 2016, on the making of a judicial management order, the judicial manager shall take into his custody or under his control all the property to which the company is or appears to be entitled. During the period for which a judicial management order is in force, all powers conferred, and duties imposed on the directors by the Companies Act 2016 or by the constitution of the company shall be exercised and performed by the judicial manager. The judicial manager of the company shall do all such things as maybe necessary for the management of the affairs, business and property of the company and do all such other things as the Court may order.

Upon compliance with Section 418, Section 419 and Section 420 of the Companies Act 2016, a meeting of creditors, summoned, shall decide whether to approve the judicial management proposal or otherwise. The proposal shall be approved by Seventy-Five percentum (75%) of the total value of creditors whose claim has been accepted by the judicial manager, present and voting at the meeting either in person or by proxy and the proposal may be approved with modifications subject to the consent of the judicial manager to each modification.

Once approved by the required majority, with or without modifications, shall be binding on all creditors of the company whether or not the creditor has voted in favour of the proposal.

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