The Federal Court recently addressed the proper construction of Section 93(3) of the Bankruptcy Act 1967 and Rule 276 of the Bankruptcy Rules 1967 in Ambank (M) Berhad v Lim Sue Beng.(1) In this appeal, the Federal Court was requested to decide on the following question of law:
In the recent decision of Cubic Electronics Sdn Bhd (in liquidation) v Mars Telecommunications Sdn Bhd [2019] CLJ 723 (“Cubic Electronics”), the apex court of Malaysia revisited the principles on forfeiture of deposits and the treatment of liquidated damages clauses in contracts.
FACTS
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The company sits at the apex of the Singapore-headquartered Otto Marine Group, which has some 70 subsidiaries, associate companies and indirect subsidiaries, employing more than 622 employees worldwide. The Otto Marine Group is in the business of investment holding, construction, repair and servicing of vessels, chartering and leasing of vessels, and offshore services. The sole director and effective shareholder of Otto Marine is Malaysian tycoon Datuk Seri Yaw Chee Siew.
Typically, once an order has been drawn up and sealed, the court becomes functus officio and has no power to vary or set aside the same. However, an exception to this rule is where an order has been irregularly obtained. This exception was recently expounded on in the leading Federal Court decision of Badiaddin bin Mohd Mahidin v Arab Malaysian Finance Bhd.(1)
In a recent judgement delivered by the Commercial Division of the Supreme Court in Atelier Etude Limousin & Ors vs BPCE International Et Outre Mer & Anor 2014 SCJ 166 the court confirmed the prevailing practice that foreign companies could be granted fixed or floating charges by Mauritian entity as security for a financing.
Any lending of funds needs to be adequately secured. This is a practice which every lender knows and should observe in order to adequately protect his credit. However, the meaning of "adequate security" is not straight forward and lenders must be careful when selecting their preferred security
There are various winding up procedures to which a Maltese-registered company may be subjected in terms of Maltese law. Amongst the said modes of action is what is known as the members’ voluntary winding up. This refers to the solvent voluntary liquidation of a company and specifically necessitates that the company in questionwill be able to pay off its debts in full within a period not exceeding12 months from the proposed date of dissolution.
General
The novel coronavirus has brought about many unforeseen circumstances which have unfortunately led many businesses to end in difficult financial situations. According to the Maltese Companies Act (Cap. 386 of the Laws of Malta), a company which is presently unable to pay its debts, or is very likely that it will be unable to pay its debts in the near future, has the possibility to either dissolve and consequently wind-up the company or recover the company.