Key Contacts:

Another interesting case on schemes around the issue of insolvency. A judgment handed down yesterday by Snowden J in MAB Leasing Limited (a Malaysia Airlines leasing company) "parked" the issue of whether a Part 26 scheme (note, not a Part 26A plan) was an insolvency related event under the Cape Town Convention and Aircraft Protocol, as there was unanimous creditor consent. At the earlier convening hearing, Zacaroli J, without needing to decide the issue, stated that the company counsel's skeleton provided a "powerful case for concluding that the [Cape Town Convention] did not apply".

“What is clear is that the selection of creditors for the class composition cannot be arbitrary or capricious. If there is evidence of a calculated and dishonest move to remove or to place certain creditors in certain class with the purpose of ensuring that the class is constituted in such a way that certain creditors would not be able to vote or that their votes would be rendered ineffective, this will be considered as class manipulation or gerrymandering.”

per Judicial Commissioner Ong Chee Kwan.

The COVID - 19 pandemic has had a tremendous and unprecedented impact on the global economy.To mitigate this, many governments have introduced temporary relief measures to help local businesses.

Key Contacts:

On 18 January 2021, the Court of Appeal in Md Isa Bujang v CIMB Bank Berhad dismissed a bankrupt’s appeal against a High Court decision that struck out his claim for, inter alia, damages of RM22,445,601.64 against CIMB Bank Berhad for delay in the auction of his property charged to the Bank. The Bank was represented by our Partner, Claudia Cheah and Senior Associate, Aufa Radzi.

Key points 

Malaysia continues to go from strength to strength as an economic powerhouse in Southeast Asia. Ranked 12th in the World Bank’s Ease of Doing Business Ranking of 2020, offering political stability, competitive taxation, modern infrastructure and low labour costs, Malaysia has in recent times enjoyed an influx of investments from multinational corporations and overseas SMEs.

Considerations for Distressed Transactions

Clean Sales

The COVID-19 pandemic has caused significant disruptions to businesses and their cash flow, with some pushed to the brink of insolvency. The directors of a company should be aware of their duties and potential personal liability if the company continues to trade while it is insolvent. These duties and potential liability may also apply to officers primarily responsible for the management of the company.

Overview of directors' duties

A director owes various statutory and fiduciary duties to the company, including:

Following the outbreak of the novel coronavirus (COVID-19) which has seen the global economy descend into a state of turmoil, companies around the world strive to weather the storm of unprecedented challenges to their businesses. As Malaysia undergoes the fourth phase of its Movement Control Order to further curb the spread of COVID-19, companies are already planning or putting in place the necessary measures to soften the impact of COVID-19 on their businesses.

It is without doubt that a business as a going concern is more valuable than its net tangible assets. Continuing business has the potential of generating future profits. In fact, a commercially viable business does not only bring economic benefits, but also broader social benefits. As such, Governments around the world have rushed to implement various measures to assist businesses to restructure and combat the financial impact of the COVID-19 outbreak.