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certain circumstances, a compulsory acquisition. 33 Unlike in administration, in which
the company‘s management is placed in the hands of an external party, restructuring
in section 176 continues to remain in the hands of the board of directors. This
practice is effective as long as the management has the confidence of everyone who
has interests in the company. The CLRC proposed that the current section 176 34
remain but should only apply to a solvent company. 35 The Judicial Management and
the CVA, on the other hand, are suggested for a company in financial difficulties.
The recommendations by CLRC reflect the rescue culture which is also evidenced in
the UK, Australia and New Zealand. The CLRC considered that the rehabilitation of
the company would benefit not only the company, its members and creditors, but
also members of the public. 36 The CLRC quoted abandoned housing projects which
were notorious during the financial crisis in 1998 as an example for justification of
its proposal. 37 Nevertheless, despite its private and public benefit, Parliament did not
adopt the recommendation and no changes were made to section 176 in 2007.
All jurisdictions compared above have the systems to more or less restructure and
rehabilitate the company. The aims of those procedures are to rescue the company as
a going concern as far as possible. In the event survival is unlikely, the systems will
seek to ensure that the distributions of assets to creditors are better than in
liquidation.
33 Ibid.
34 The current section 176 governs the procedures to be followed in all types of schemes covered
under the Act. The Act allows a high degree of flexibility in which types of schemes to be
implemented. It provides for alternatives to the drastic steps of liquidation.
35 CLRC Corporate Insolvency Regime above n23 at [4.1].
36 Ibid, at [1.2].
37 Ibid.
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