The Path to Judicial Management in Malaysia is Paved with Obstacles: Lessons from Singapore and the United Kingdom

Abstract

In embracing corporate rescue, Malaysia introduced Judicial Management (JM) into its company law framework on 1 March 2018. The mechanism was modelled on Singapore's Judicial Management, which itself was based on the United Kingdom (UK) Administration Procedure. Despite its laudable objective of facilitating the rescue of financially distressed companies, the path to JM is paved with obstacles. This article identifies some of these obstacles and examines the issues that give rise to them. At the same time, the article proposes legislative reforms, drawing on comparative laws in Singapore and the UK. For the purposes of this article, three obstacles are examined: first, the power of a secured creditor or debenture holder to veto the JM application; second, the stringent and prohibitive burden imposed on an applicant company caused by the judicial interpretation, at times conflicting, of the provisions governing the application of a JM order; and third, the higher threshold imposed by legislative requirements on creditors’ meeting to approve the JM proposal. These obstacles are encountered at three stages of a JM application: first, at the initial stage of the application; second, in considering the merits of the JM; and third, when the creditors vote to approve the application.