Corporate Rescue Mechanisms

The Covid-19 pandemic and the Movement Control Order have caused distress to many companies due to the suspension of business operations and suppression of consumer demand. In Malaysia, the Companies Act 2016 offers three corporate rescue mechanisms which can be used to avail distressed companies. Corporate rescue mechanisms that are found under the Companies Act 2016 include Scheme of Arrangements, Corporate Voluntary Arrangement and Judicial Management. This article provides an overview of each mechanism and will focus on private limited companies. Division 8 of Part III of the Companies Act 2016 came into force on 1 March 2018, together with the Companies (Corporate Rescue Mechanism) Rules 2018, which aim to facilitate financially distressed companies and rehabilitate business viabilities which provide alternatives to liquidation.