OPTION FOR SIAK SIONG

Arrangements and Reconstructions S.365-371 of Companies Act 2016

1. Company and its creditors can propose a schemes of arrangements when the company is in
financial straits but it is believed that it might be worthwhile to allow the company to
continue its business.

2. Section 367 (1) provides that where there is a proposal for a compromise or arrangement
between a company or its creditors or members, the court has powers to order a meeting of
creditors or members.

3. Section 367 (3): If the proposal for compromise or arrangement is agreed by a majority of
75% of the total value of the creditors or members present and vote, the compromise or
arrangement shall be binding on all the creditors or members.

4. Section 368 (1): If no order has been made or resolution passed for the winding up of a
company and a compromise or arrangement has been proposed between the company and
its creditors or any class of those creditors, the Court may, in addition to any of its powers,
on the application in a summary way of the company or any member or creditor of the
company, restrain further proceedings in any action or proceeding against the company
except by leave of the Court and subject to any terms as the Court may impose.

5. Section 368 (2) The Court may grant a restraining order under subsection (1) to a company
for a period of not more than three months and the Court may on the application of the
company, extend this period for not more than nine months.

Receivers and Receivers and Managers S.372-393 of Companies Act 2016

1. A company is said to enter into receivership when a receiver is appointed in respect of some
or all of its property. The appointment may be made either pursuant to a term in the
instrument creating a charge or by application to court.

2. Receiver is appointed to protect to protect creditors’ interest in the company’s property.

The receiver has the power and duty to take control of the charged assets and to sell those
assets. A receiver also collects the rent or other income from the property but does not
manage it in the sense of running it as a business.1

3. Receiver could buy and sell and generally carry on the trade and continue to run the
business of the company. A receiver manager appointed out of court derives his powers
from the terms of the instrument under which the appointment is made, while a court
appointed receiver manager has his powers granted under the court order making the
appointment.

1
Re Manchester & Milford Railway Co (1880) 14 Ch D 645
4. S.376: (1) The Court may appoint a receiver or receiver and manager in one of these three
situations:

(a) the company has failed to pay a debt due to the debenture holder or has otherwise failed
to meet any obligation to the debenture holder, or that any principal money borrowed by
the company or interest is in arrears;

(b) the company proposes to sell or otherwise dispose of the secured property in breach of
the terms of any instrument creating the security or charge; or

(c) it is necessary to appoint a receiver or receiver and manager to ensure the preservation
of the secured property for the benefit of the debenture holder.

5. Common law receivership2: The court can appoint a receiver or receiver and manager under
common law to protect the interest of the company. The requirements of such appointment
are:
a. There is a good prima facie claim of title by the applicant;
b. The property of the company is in jeopardy; and
c. The application would be placed in a worse situation if the appointment of the
receiver is delayed.

Corporate Voluntary Arrangement

Judicial Management

Voluntary Winding Up

2
S.25(2) Courts of Judicature Act 1964, para 6 Schedule Order 30 r.1(1) of the Rules of Court 2012.