Given the current situation brought about by the coronavirus pandemic, the Malaysian economy has been badly affected with serious supply chain disruptions due to the nationwide lockdown. This has resulted in the tightening of companies’ cash flows and has given rise to an urgent need for companies to implement rescue mechanisms and restructure their businesses.
In its recent decision, Sun Electric Power Pte Ltd v RMCA Asia Pte Ltd (formerly known as Tong Teik Pte Ltd) [2021] SGCA 60, the Singapore Court of Appeal had occasion to clarify the applicable test for determining whether a company is insolvent/ unable to pay its debts under Section 254(2)(c) of the Singapore Companies Act 1967 (“Companies Act”) (which is in pari materia with Section 466(1)(c) of our Companies Act 2016).
This article looks at some recent developments in the bankruptcy and insolvency laws in Singapore and Malaysia.
Singapore: Dispositions of property
Under the Singapore bankruptcy law, any disposition of property made by a bankrupt since the day of making the application for the bankruptcy order is void unless the court consents to, or ratifies, the disposition. This rule is enshrined in section 328 of the Insolvency, Restructuring and Dissolution Act, 2018 (the IRDA).
Brief background factsIn the case of Ler Cheng Chye & Anor v Wong Ching Yong & Ors [2020] 7 AMR 900, [2020] MLJU 1565, Darryl Goon J decided on the issues concerning a challenge to the role played by a receiver and manager, and the need to consider what a receiver and manager appointed over the assets and undertaking of a company may or may not do, upon the commencement of winding up proceedings of that company.
In Re:Malaya Sibuku; Ex P: Kaya Karisma Sdn Bhd [2021] 5 CLJ 403, various submissions were advanced by a judgment debtor (“Debtor”) in an appeal against the Senior Assistant Registrar’s (“SAR”) decision in granting leave to the judgment creditor (“Creditor”) to commence bankruptcy proceedings against the Debtor.
The Minister of Domestic Trade and Consumer Affairs issued the Prescription of Amount of Indebtedness of Company under Paragraph 466(1)(a) (Gazette Notification No. 4159/2021) stating that the amount of indebtedness for the purposes of section 466(1)(a) of the Companies Act 2016 shall be an amount exceeding RM50,000 with effect from 1 April 2021.
