Company Liquidation


Insolvency and restructuring processes were included in Malaysian law under the Companies Act 1965 (CA 1965), but unfortunately the range of such proceedings was very limited, and the Malaysian insolvency framework lacked true rescue mechanisms.

All this changed with the enactment of the Companies Act 2016 (CA 2016), which came into force on 30 January 2017. The CA 2016 introduced two new corporate rescue processes, namely corporate voluntary arrangements (CVA) and judicial management (Judicial Management) to add to the insolvency and restructuring processes that were available under the CA 1965. This was the game changer for the company liquidation processes.

Businesses strive to flourish and grow but at times there will be untoward circumstances and as such, when faced with severe financial complications or insolvency, companies would first opt to restructure for survival reasons and to make them viable again, but only if they have a genuine chance for survival.

Insolvency on the other hand refers to the lack of financial resources to sustain a company, indicated by its inability to repay debts or having negative net assets. The two main insolvency procedures are winding up (also known as liquidation) and receivership.

Winding Up

There are three types of winding up, ie members’ voluntary liquidation, creditors’ voluntary liquidation and Court liquidation. Both types of voluntary liquidations are initiated by the company while Court winding-up may be commenced by the company, its shareholders, creditors or the regulatory authorities such as Bank Negara or the Registrar of Companies. A members’ voluntary winding-up involves only solvent companies.

Members’ Voluntary Liquidation

A members’ voluntary liquidation (MVL) route is pursued when a solvent company chooses to cease operations voluntarily and is able to pay off its debts in full within 12 months of its winding up. This is usually because the company has ceased operations or has completed its objectives. Occasionally, the MVL may be the result of disagreements among the company’s shareholders which lead to a mutual decision to wind up the company.

Creditors’ Voluntary Liquidation

When the directors of a company believe that the company is unable to continue its business due to its liabilities, they will initiate a creditors’ voluntary liquidation (CVL) by making the necessary declaration, appointing the provisional liquidator and resolving to wind up the company voluntarily.

Court Liquidation

There are various circumstances in which a company may be liquidated or wound up by the Court. The most common is that the company is unable to pay its debts. Others include directors having acted in their own interest, oppression of minority shareholders, suspension of business by company, regulatory non-compliance, and the company’s banking or insurance licence having been revoked.


Receivers and managers may be appointed privately by a debenture-holder to take control of the relevant assets and then to sell or realise them. The proceeds are then given to debenture-holder. The appointment of the receivers and managers occurs when the company defaults, eg through late payments or not complying with the loan agreement.

Receivers and Managers may also be Court appointed by parties concerned about protecting the assets of the company. In this case, their powers will be determined by the Court.

  • Administrations and receiverships and managements
  • Corporate debt restructuring and schemes of arrangement
  • Corporate recovery, turnarounds and workouts
  • Court appointed liquidations and bankruptcy
  • Investigating accountant’s report
  • Legal disputes and litigation support

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