On 10 April 2020, the Government of Malaysia decided to extend the Movement Control Order (“MCO“) by another 14-days to 28 April 2020. This is the second extension to the MCO, which was originally imposed for a two-week period from 18 March 2020 to 31 March 2020, and was extended to 14 April 2020.1

Earlier, on 25 March 2020, Malaysian Institute of Economic Research (“MIER“) estimated that Malaysia’s real gross domestic product (“GDP“) may shrink by about 2.9% for 2020 compared to 2019. MIER further estimated that any additional two-week extension of MCO may amplify the contraction of real GDP by 3% to 4%, relatively to the 2020 baseline2.

Kristalina Georgieva, the Managing Director of International Monetary Fund (“IMF“) stated that “the outlook for global growth: for 2020 it is negative-a recession at least as bad as during the global financial crisis or worse.3

Many reputable economists have spoken on the potential recession, Paul Krugman stated “…we’re going into the economic equivalent of a medically induced coma, in which some brain functions are temporarily shut down to give the patient a chance to heal.4

Joseph Stiglitz stated “This is a different kind of crisis than normal crises. It’s just not a problem of aggregate demand…. Because of the disease, people are shutting down their businesses…More demand is not going to save that particular problem.5

Worrying? Of Course.

Recession is, as per the famous last word of Thanos6 in the movie Avengers: End Game, inevitable.

Having said that, as we all know, the movie didn’t end there. Iron Man then said, “I am Iron Man” and snapped his fingers which save half population of the world7.

This time around there will be no Iron Man, but let us lawyers save you! Let’s rescue your company. Let’s restructure!

Corporate Restructuring Mechanism under Companies Act 2016 (“CA 2016“) is an effective tool in facing the current tough economic environment. This is with a view of giving companies the opportunity to re-strategize, reorganise the management, ownership and operations as well as to make the necessary financial adjustment to cater to their assets and liabilities. This would help companies to survive in the long run.

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