In the recent case of Genisys Integrated Engineers Pte Ltd v UEM Genisys Sdn Bhd & Ors [2023] 3 MLJ 627, the Federal Court had the occasion to consider whether the Limitation Act 1953 applies to a proof of debt. The Federal Court held that the Limitation Act 1953 does not apply to a proof of debt which is accepted and not formally rejected by a liquidator.

Background Facts

The Insolvency (Amendment) Bill 2023 (“Bill”) was passed by the Dewan Rakyat on 24 May 2023. It will next be tabled before the Dewan Negara. Once passed, the Bill will be cited as the Insolvency (Amendment) Act 2023 (“Amendment Act”) and will come into operation on a date to be appointed by the Minister in the Prime Minister's Department (Law and Institutional Reform) (“Minister”) by notification in the Gazette.

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Indonesia Authors: Miriam Andreta and Hans Adiputra Kurniawan 1. Bankruptcy and Liquidation: Updates Brought by PPSK Law With respect to bankruptcy and liquidation of certain parties (public listed companies, banks, non-bank financial institutions), there are certain updates and clarifications set out in Law on Development and Improvement of Financial Sector (also known by its local abbreviation “PPSK Law”) - which came into effect on 12 January 2023 (except for certain provisions that are explicitly intended to take effect otherwise).

In the recent case of MDSA Resources Sdn Bhd v Adrian Sia Koon Leng [2023] 3 CLJ 191 the Court of Appeal upheld the High Court decision in, among others, dismissing the Appellant’s application for sanction of a scheme of arrangement made pursuant to section 366(4) of the Companies Act 2016 (“CA 2016”).

Background Facts

The High Court has recently granted Sapura Energy Bhd and its 22 subsidiaries (“Sapura Entities”) a fresh order to hold court-convened meetings with creditors within a period of three months. A restraining order was also granted for the same period. By now, the Sapura Entities would have been granted 3 restraining orders which stretches out to a total period of 15 months.

Among the measures announced by the Prime Minister and Minister of Finance of Malaysia, Dato’ Seri Anwar Ibrahim, during his 2023 Malaysia Budget Speech on 24 February 2023 was a proposal to amend the Insolvency Act 1967 (‘the Act’) to enable bankrupts to be automatically discharged quickly.

The Finance Minister added that pending the amendment of the Act, “minor cases” involving debts of less than RM50,000 that fulfil the criteria will be immediately discharged beginning 1 March 2023.

Summary

The role of the liquidator is to realise the assets of the company and from the sale proceeds, pay off creditors of the company. If a difficulty arises in the course of his administration of the winding up, the liquidator may apply to the winding up court for directions.

It has often been said that the route of winding up a company is the remedy of last resort in a creditor’s odyssey to recover a debt owed to it. This is as not only would the granting of a winding up order have drastic repercussions for the debtor company, but there is also no guarantee that the creditor would be able to recover the full debt thereafter.

“Rather fail with honour than succeed by fraud” – Sophocles    

Introduction  

Fraud and its impact on businesses are an increasing concern. The costs of addressing the consequences of fraudulent conduct are growing exponentially and fraudulent schemes are becoming more prevalent, sophisticated and even international.