THEORIES OF CORPORATE INSOLVENCY: A PHILOSOPHICAL ANALYSIS OF THE CORPORATE RESCUE MECHANISMS UNDER THE COMPANIES ACT 2016

  • Thim Wai Chen School of Law, College of Law, Government and International Studies Universiti Utara Malaysia, Kedah, Malaysia
  • Ruzita Azmi School of Law, College of Law, Government and International Studies Universiti Utara Malaysia, Kedah, Malaysia
  • Rohana Abdul Rahman 3School of Law, College of Law, Government and International Studies Universiti Utara Malaysia, Kedah, Malaysia

Abstract

This paper aims to provide an examination of the theories that underpin corporate insolvency as developed in the US and the UK, and apply that to the two novel corporate rescue mechanisms; the corporate voluntary arrangement and judicial management, which are embedded in the Companies Act 2016 (CA 2016) of Malaysia. This paper adopted a doctrinal and theoretical approach to law. The tension in the corporate rescue mechanisms in the CA 2016 between creditors and other stakeholders of a company affected the objectives on corporate insolvency in Malaysia. This paper identified the theories that are reflected in the corporate rescue mechanisms in the CA 2016– a gap within the provisions which was left out in the process that ranged from consultancy and leading up to the drafting of the CA 2016. In addition, the objectives of introducing the corporate rescue mechanisms were identified. These findings may pave the way to reform the corporate rescue law in order to enhance its conformity with the objectives of corporate rescue in Malaysia. This in turn would facilitate the recovery of financially distressed companies and the minimisation of the loss of employment.

Author Biographies

Ruzita Azmi, School of Law, College of Law, Government and International Studies Universiti Utara Malaysia, Kedah, Malaysia

Dr Ruzita Azmi, Associate Professor, obtained her LLB (Hons) from International Islamic University, Malaysia, LL.M from University of Wales, Aberystwyth and PhD in Law from University of Aberdeen, UK. She is attached at University Utara Malaysia, Kuala Lumpur Campus. Her research interests are company, insolvency, employment law and mental health.

Rohana Abdul Rahman, 3School of Law, College of Law, Government and International Studies Universiti Utara Malaysia, Kedah, Malaysia

Dr Rohana Abdul Rahman, Associate Professor, Dean of School of Law, Universiti Utara Malaysia. She graduated with LLB (Hons) from International Islamic University Malaysia, LLM (Business Law) from University of Wales, Aberythwyth, United Kingdom and PhD in Law from The University of Queensland, Australia. She joined Universiti Utara Malaysia since 1997 and her area of research interest are government procurement law, insolvency law and alternative dispute resolution.

Published
2021-07-05
How to Cite
CHEN, Thim Wai; AZMI, Ruzita; ABDUL RAHMAN, Rohana. THEORIES OF CORPORATE INSOLVENCY: A PHILOSOPHICAL ANALYSIS OF THE CORPORATE RESCUE MECHANISMS UNDER THE COMPANIES ACT 2016. UUM Journal of Legal Studies, [S.l.], v. 12, n. 2, p. 167–202, july 2021. ISSN 0127-9483. Available at: <http://e-journal.uum.edu.my/index.php/uumjls/article/view/uumjls2021.12.2.8>. Date accessed: 07 dec. 2021. doi: https://doi.org/10.32890/uumjls2021.12.2.8.