A judicial management order is discharged after 180 days unless extended by the Court. ... SGHC 283 appears to set a higher standard for refusing leave to call a meeting in relation to a scheme of arrangement. 2.6.5In short, therefore, a scheme of arrangement is a statutory vehicle which allows a company to implement a restructuring plan with less than 100% agreement by the creditors and while the current management remains in control of the company. Notwithstanding the uncertainty, the Singapore Courts have actively developed case law on when third-party agreements may be entered into by insolvent companies.[17]. Malaysia’s scheme of arrangement framework allows for a restraining order to be granted. The Company is presently under judicial management and its shares (the “Shares”) are suspended from trading. [11] Section 351(2A) of the Companies Act. Section 227I(1) of the Companies Act provided that the judicial manager will be personally liable for contracts adopted by him in carrying out of his functions but the judicial manager may also disclaim personal liability in this regard. © Clyde & Co LLP. This article reviews the various court decisions (both reported and unreported) that have been issued since the changes became operative. Now Section 91(6) of the IRDA. In practice however, the judicial manager would always disclaim liability and the imposition of personal liability was therefore rendered academic and served no practical utility. Schemes of Arrangement See previous article on Schemes of Arrangement. Judicial Management is fundamentally a rehabilitation process, which differentiates it from liquidation. Scheme of Arrangement Under Section 366 of the Companies Act 2016 , the Court may order for a meeting of the company to be convened for the purposes of proposing a ‘scheme of arrangement’ (“ SOA ”), which is essentially a plan for how the company is … The most significant amendments implemented in 2017 are set out below. On 30 July 2020, the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) came into operation. [3] During this period, a moratorium is placed on proceedings against the company,[4] which gives the company breathing space to try and restructure. A court-sanctioned scheme of arrangement, on the other hand, would allow a company to reach a compromise arrangement which is binding upon all c… Schemes of Arrangements under s 210 of the Companies Act (Cap 50) have been increasingly utilized as alternatives to judicial management and liquidation for insolvent companies. Introduction THE purpose of judicial management is to prevent viable companies in financial difficulties from being liquidated. With over 20 years of experience working in Australia, the Caribbean and Asia, Mr. Taylor specializes in insolvency and restructuring and has experience with formal appointments such as liquidator, receiver, judicial management, scheme of arrangement as well as out of court processes. The judicial management mechanism, modeled after the Singapore provisions, provides a further option to rehabilitate a financially distressed company. #1: Wellcom – Judicial Management ( CIMB Islamic Bank Bhd v Wellcom Communications (NS) Sdn Bhd & Anor [2019] 4 CLJ 1, CA) The cases featured below range from judicial management, schemes of arrangement and the receiver’s ability to have continued supply of utilities. [13] Section 227B(5)(b) of the Companies Act. In this regard, the Court will only make a Judicial Management order 1 where it serves one or more of the following statutory purposes: 2. The existing statutory regime for Judicial Management, as amended in 2017, was largely transplanted into the IRDA, with some tweaks to further enhance its attractiveness to users. Typically, these companies do not have sufficient funds to pursue claims and third-party funding agreements are an attractive option which the company can tap in to possibly attain a greater realization of the company’s assets. Implementation of a Scheme of Arrangement; Preserving all or part of the company’s business as a going concern; or. Judicial Management, which was based on the English administration regime, was intended as a mechanism through which potentially viable companies could restructure their liabilities and rehabilitate themselves. Section 227B (1) of the Companies Act was amended to allow a company to be placed under Judicial Management if the Court was satisfied that the company “is or is likely to become unable to pay its debts”. An ailing company and its creditors may privately reach a compromise arrangement under which the creditors may agree to forgo all or part of their claims against a company, or to reschedule their debts. 2017 Amendments to the Companies Act. Judicial management is also often compared with a scheme of arrangement, which is a similar statutory tool designed to allow the rehabilitation of financially distressed companies. https://www.clydeco.com/en/insights/2020/07/third-party-funding-in-the-context-of-insolvency-p. The objective of Judicial Management … This suggests that the then existing insolvency laws were inadequate for such a purpose. Schemes of Arrangement: To negotiate compromises and settlements with your creditors . two new corporate rescue mechanisms: judicial management and corporate voluntary arrangement; and additional controls on court sanctioned schemes of arrangement to make this process more effective as a means of effecting corporate debt restructuring. By way of contrast, the judicial manager is an independent "outsider" who takes over the running of the company from the management. In this regard, the Court will only make a Judicial Management order where it serves one or more of the following statutory purposes: Implementation of a Scheme of Arrangement; a secured creditor) objected to a Judicial Management application by the company, the Court would be compelled to dismiss the application unless it was against public interest. He or she owes a duty to act in the interest of the company's creditors as a whole, and must act as quickly and efficiently as is reasonably practicable. 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