The Companies Act 2016 provides three mechanisms for a company seeking to restructure rather than be wound up: a scheme of arrangement, a corporate voluntary arrangement (CVA) and judicial management. The Companies (Amendment) Act 2024 (Act A1701) amended all three.
Scheme of arrangement
A scheme is a court-supervised compromise or arrangement with creditors or members. It binds a class if agreed by a majority of seventy-five per cent of the total value of that class present and voting, and approved by order of the Court. Our article on schemes of arrangement gives a short overview.
Corporate voluntary arrangement
Under a director-proposed CVA, the nominee assesses the proposal before the member and creditor meetings. Once approved, the arrangement is implemented under a supervisor, who may be the nominee. A proposal affecting a secured creditor’s right to enforce its security requires that creditor’s concurrence; separate rules govern recovery of secured property during the moratorium. CVA eligibility widened on 31 January 2025: public-company status or an existing charge no longer automatically excludes a company. Certain regulated companies remain excluded under section 395. That change came into operation on 31 January 2025 under P.U. (B) 53/2025.
Judicial management
The Court may make a judicial management order if it is satisfied that the company is or will be unable to pay its debts, and considers that the order would be likely to achieve the survival of the company or its undertaking as a going concern, the approval of a scheme of arrangement, or a more advantageous realisation of assets than on a winding up. A judicial manager appointed by the Court then manages the company's affairs.
This article is general information only and is not legal or insolvency advice. Which route is available depends on each company's circumstances; please refer to the current text of the Act published by SSM and take legal advice. See Saifudin & Co's corporate restructuring and recovery services for the financial side of a restructuring.