Judicial Management Vs Scheme of Arrangement: Evaluating the Corporate Rescue Mechanism in Malaysia with Comparative Analysis with United Kingdom

Companies that are financially distressed do not necessarily end in liquidation. There are effective corporate rescue mechanisms in Malaysia that can rehabilitate these companies. Two of the main mechanisms in Malaysia under the Companies Act 2016 (‘CA 2016’) are the Judicial Management (‘JM’) and also Scheme of Arrangement (‘SOA’) which allows financially distressed companies to be restructured and preserved. These mechanisms also allow these companies to recover financially and at the same time preserve all stakeholders’ interests.
In this article, the effectiveness of JM and SOA in Malaysia will be evaluated through the current legal framework in Malaysia, the practicality, its strengths and also weaknesses. Throughout this study, a qualitative method will be adopted through comparative analysis, socio-legal analysis and also doctrinal study. In the comparative analysis, United Kingdom’s (‘UK’) corporate rescue mechanisms, especially its practicality and arrangement will be studied in order to compare and contrast with Malaysia’s framework.
The primary claim of this article is that there are still few problems persisting even though Malaysia has improved its corporate rescue mechanisms. Amongst other, the problems are due to intricate method of implementation, strong creditor control and minimal judicial direction. On the other hand, the UK has better practical support and procedural flexibility. Therefore, there are lessons for Malaysia to benefit and improve its own corporate rescue mechanism by adopting from the UK.

Corporate Rescue, Judicial Management, Scheme of Arrangement, Insolvency Law, Corporate Restructuring

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