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similar legal provisions as in the UK, Australia and New Zealand, namely a Judicial
Management System and a Corporate Voluntary Arrangement to complement the
existing system in section 176. 23 The CLRC proposed to introduce a statutory
scheme known as Judicial Management to facilitate the rehabilitation process. 24 It
allows an aggrieved creditor (either secured or unsecured) to apply to court for an
order to place the management of the company in the hands of a judicial manager
who has the necessary skill and experience. 25 Once appointed, a judicial manager
will prepare a workable restructuring plan which must be acceptable to the majority
of creditors and be sanctioned by court.
The aims of a restructuring plan are similar to those in the Australian and New
Zealand legislation, as well as in the UK to a certain extent. 26 A period of
moratorium shall commence from the date of presenting a petition for Judicial
Management until the appointment order is in force. During that period, no
proceedings can be initiated against the company. The CLRC also recommended
having a Company Voluntary Administration (CVA) modeled after the UK with
modifications where necessary. 27 An Administration process provides a gateway for
exit routes for the company in time of difficulty. A reorganization procedure
23 Malaysian Corporate Law Reform Committee ―A Consultative Document on '1) Reviewing
Corporate Insolvency Regime - The proposal for a Corporate Rehabilitation Framework; 2)
Reforming the Company Receivership Process; 3) Company Charges and Registration'‖ (2007) at
ch 1 [CLRC Corporate Insolvency Regime].
24 Ibid, at [2.17].
25 Ibid, at [2.1]
26 See section 239A of the New Zealand Companies Amendments Act 2006 and section 435A of the
Australian Corporations' Act 2001. The objects of voluntary administration are to provide for the
business, property and affairs of an insolvent company to be administered in manner which would:
(a) maximize the company's chances of continuing existence; or
(b) if it is not possible to maintain the company's continuing existence, to provide better returns
to creditors and shareholders than would result from immediate liquidation.
27 CLRC Corporate Insolvency Regime above n23 at [3.1].
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