[Read time: 4 minutes] The Corporate Insolvency and Governance Bill (CIGB) introduces a new process for the reconstruction of companies in financial difficulties (a Restructuring Plan). Therefore, companies are to ensure that its proposed scheme is viable. The judicial manager will prepare a scheme for creditors’ approval for which a 75% majority sanction is required. on the application in a summary way of the company or any of its members or creditors, restrain further proceedings in any action or proceedings against the company except by leave of the court and subject to any terms as the court may impose; (2) The court may grant a restraining order under subsection (1) to a company for period of not more than 3 months and the court may, on the application of the company extend the period of not more than 9 months if-. Significant changes are as follows: Under this subdivision, Company means any corporation liable to be wound up under the CA 2016. ARRANGEMENTS AND RECONSTRUCTIONS 118. Schemes of arrangement are not exclusively intended for insolvent companies and are widely utilised by solvent entities. The recent amendments to the Companies Act exemplifies the Government's efforts towards promotion of effective ways of doing business in Malaysia. Schedule 9 of the bill provides for a new Part 26A to the Companies Act 2006, and contains provisions that facilitate entering arrangements or reconstructions for a company in financial difficulties. The Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020 For clarification, the definition does not include companies undergoing reconstruction and/or amalgamation (Section 370, CA 2016). Malaysia’s scheme of arrangement framework allows for a restraining order to be granted. Extension of period of a restraining order. However, when the provisions on corporate rescue mechanism were enforced on 1 March 2018, the number of applications for scheme of arrangements are higher compared to the new rescue mechanisms. Companies in financial distress often undergo corporate reconstructions to enable them to remain in business rather than go into liquidation. This guidance deals with TCGA92/S135 to TCGA92/S139. The extension of a further 9 months to the initial 3 months validity period of a restraining order, subject to compliance of requirements laid down under Section 368(2) of the CA 2016, underscores the legislative effort to enable financially distressed companies to see through their scheme of arrangements. 1.1 An arrangement or a compromise under Sections 198 - 200 (‘Section 198’) of the Cyprus Companies Law, Cap. Corporate Voluntary Arrangement (“CVA”) Judicial Management (“JM”) Purpose . Arrangements and Reconstructions under Sections 198 - 200. Under the scheme of reconstructions and amalgamations, the whole or any part of the undertaking or the property of any company concerned in the scheme is to be transferred to another company. Corporate voluntary agreements (CVA) This is a new provision where the company can enter into a compromise or arrangement with its creditors under the supervision of an insolvency practitioner with minimal court intervention. A scheme of arrangement is a statutory procedure pursuant to Part 26 of the Companies Act 2006, whereby a company may make a compromise or arrangement with its members or creditors. If the Court can be satisfied with the schemes, this will surely facilitate approval by creditors to the scheme, thus, expediting reconstruction of a company. Procedures after obtaining of the restraining order are laid down in Section 368(5) of the CA 2016, whereby the Company shall within 7 days from the order lodge an office copy with the Registrar and publish a notice of the order in 2 local newspapers, namely, one in national language and another in English language. The extension of a further 9 months to the initial 3 months validity period of a restraining order, subject to compliance of requirements laid down under Section 368(2) of the CA 2016, underscores the legislative effort to enable financially distressed companies to see through their scheme of arrangements. Legislation has given the support to assist financially distressed companies by allowing a longer moratorium of restraining orders (provided fulfillment of the requirements) so that these companies can get back on their feet again. This is a mechanism by the Court to ascertain the genuineness of such schemes and therefore not an abuse of the Court’s process, and to facilitate agreement by creditors and/or members to the scheme of arrangement. 2. The obtaining of a restraining order shall, however, not affect any further proceedings in an action or proceedings that should be taken by the Registrar or Securities Commission. On 22 January 2018, the Singapore High Court (“Court”) sanctioned the first “pre- packaged” scheme of arrangement under Singapore’s new restructuring and insolvency regime that was unveiled in 2017. 990. The restraining order would restrain any further legal proceedings to be initiated against the applicant company applying for a scheme of arrangement. Section 587(1) is concerned with the definition of some of the terms used. Author/Edited by: Dáibhí O’Leary and Thomas B. Courtney Publisher: Bloomsbury Professional In our position in Malaysia, the restraining will come into effect after section 176 complies with. arrangements and reconstructions of companies. Previous Document. This decision confirms that a distressed company faces a difficult hurdle when seeking for a restraining order in a scheme of arrangement. However, unlike a CVA, a scheme of arrangement can bind secured creditors even without their express consent if the requisite majorities are achieved. 113 ('Law'), can be proposed between a company and its creditors or any class of them or between the company and its members or any class of them, for the purpose of, or, in connection with a scheme for the … The restraining order would restrain any further legal proceedings to be initiated against the applicant company applying for a scheme of arrangement. echo __('Our newsletter containing perspectives and insights to legal and contemporary issues. A listed corporation which is undertaking a scheme of compromise, arrangement, amalgamation or reconstruction ("proposed Scheme") must immediately announce the proposed Scheme to the Exchange. LAWS OF MALAYSIA ACT 441 LABUAN COMPANIES ACT 1990 Incorporating latest amendment - Act A1428 of the year 2012 Date of Royal Assent : 22 August 1990 Date of publication in the Gazette : 30 August 1990 Date of coming into operation : 1 October 1990 [P.U. 1. distressed companies to restructure its debts and to continue on with its business in a more effective and efficient manner. If the Court can be satisfied with the schemes, this will surely facilitate approval by creditors to the scheme, thus, expediting reconstruction of a company.