MALAYSIA Law and Practice Contributed by: Will Fung, Penelope Gan and Kee Shao Yee, Richard Wee Chambers
7.9 Dissenting Lenders and Non-Consensual Restructurings In Malaysia, dissenting lenders cannot be bound through an out-of-court restructuring. Contractual restructurings require the consent of each affect - ed lender, and a non-consenting lender retains its enforcement rights unless restrained by agreement or court order. Non-consensual restructurings are available only through statutory mechanisms under the CA 2016, principally a scheme of arrangement. Once approved by the requisite majority within each creditor class and sanctioned by the court, the scheme binds all creditors in that class, including dissenters. Judicial oversight, class-based voting thresholds, and the right of creditors to object at court hearings serve as key protections for dissenting lenders, particularly where security or priority rights may be affected.
7.10 Expedited Restructurings Malaysia does not have a statutory pre-packaged insolvency. However, expedited restructurings are commonly achieved through pre-arranged schemes of arrangement, where restructuring terms are negoti - ated with key creditors in advance of a court process. Creditors may enter into restructuring support or lock- up agreements committing to vote in favour of the scheme, subject to agreed conditions. Once filed, the scheme becomes binding on creditors within each class if approved by the statutory majority and sanctioned by the court. Where full creditor con - sent is obtainable, amendments may be implemented contractually without court involvement. Balance sheet restructurings typically involve matu - rity extensions, covenant resets, debt write-downs, debt-to-equity conversions, or refinancing. Where dis - sent exists, a scheme of arrangement is used to bind affected classes. Restructuring support and voting agreements are gen - erally enforceable as contractual arrangements, pro - vided they do not conflict with statutory requirements or improperly fetter the court’s discretion.
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