Summary

There have been welcome developments in the law governing corporate restructuring and insolvency introduced by the new Malaysian Companies Act 2016.

The new Companies Act marks major legislative changes to Malaysian corporate law. Two significant developments introduced under the Companies Act 2016 relate to judicial management and corporate voluntary arrangements.

Judicial management

Key points

• Once clear that an action is improperly constituted, it should not be allowed to proceed.

• Those in control of a company have the duty to manage that company in accordance with its constitution.

The Facts

Key Points

• Statutory powers are to be exercised in accordance with a company’s articles of association
• The Duomatic principle cannot simply be used as a bandage to cure a company’s procedural errors

The Facts

This appeal considered whether the sole director of a company, whose articles required two directors for its board meeting to be quorate, could validly appoint administrators under paragraph 22 Schedule B1 of the Insolvency Act 1986.

According to a ruling by the German Federal Court of Justice (BGH) on 5 May 2022, a passenger's claim for reimbursement due to a flight cancellation in insolvency needs to be established in the schedule of creditors, otherwise it remains a claim for air transport that cannot be enforced in insolvency proceedings if the flight was booked and paid for before the insolvency proceedings.

The temporary restrictions on the winding up of companies were lifted on 31 March 2022. This means the legal regime governing insolvency has returned to its pre-pandemic approach.

The pre-31 March position

On 15 November 2021, the English Court released its reasoned judgment for the sanction of Amicus Finance Plc's (Amicus) restructuring plan.

Background

Amicus, a short term property lender, entered administration in 2018. The administrators proposed a restructuring plan to compromise creditors' claims, exit the administration and ultimately restore the company as a going concern. The company faced imminent liquidation if the plan was not approved. Secured creditor, Crowdstacker, an online peer-to-peer lending platform, opposed the plan.

In June 2020, the "Anti-Crisis Shield 4.0" introduced a simplified form of restructuring proceeding into Polish law. This modified version of the procedure ushered in significant improvements for debtors, including a moratorium on enforcement action and four months to seek the consent of creditors to restructuring proposals, and to seek the approval of the arrangement with the court.

On 1 January 2021, the German Act on Stabilization and Restructuring Framework for Business (StaRUG) came in to force as part of the German Act on Further Development of Restructuring and Insolvency Law (SanInsFoG). It contains several new pre-insolvency restructuring procedures, including a new preventive restructuring plan and corresponding protection of minority creditors.

What is the aim of the new preventive restructuring plan?

Im (vorläufigen) Insolvenzverfahren ist es die Aufgabe des Insolvenzverwalters, für den Schutz personenbezogener Daten zu sorgen. Er übernimmt anstelle des ursprünglichen Geschäftsführers/Inhabers die Führung des Unternehmens und wird damit gemäß Art. 4 Nr. 7 Datenschutzgrundverordnung (DSGVO) datenschutzrechtlich verantwortlich. Das gilt nicht nur, wenn personenbezogene Daten für die Zwecke des Insolvenzverfahrens verarbeitet werden, sondern betrifft alle Verarbeitungsvorgänge im schuldnerischen Unternehmen. Ein „Insolvenzprivileg“ kennt das Datenschutzrecht dabei nicht.

The Slovak parliament recently passed a new law – The Temporary Protection of Distressed Undertakings Before Creditors – which came into effect on 1 January 2021. It replaces the current temporary protection (moratorium) adopted at the outset of the COVID-19 crisis.

The new regulation will only be granted where a majority of the unrelated creditors involved agree with the stay. This marks a departure from the COVID-19 moratorium, which could be easily accessed by all debtors impacted by the coronavirus pandemic.