Section 405. Power of Court to make a judicial management order and appoint a judicial manager

(1) Where a company or its directors, under a resolution of its members or the board of directors, or a creditor, including any contingent or prospective creditor or all or any of those parties, together or separately, makes an application under section 404, the Court may make a judicial management order in relation to the company if—

(a) the Court is satisfied that the company is or will be unable to pay its debts; and

(b) the Court considers that the making of the order would be likely to achieve one or more of the following purposes:

(i) the survival of the company, or the whole or part of its undertaking as a going concern;

(ii) the approval under section 366 of a compromise or arrangement between the company and any such persons as are mentioned in that section;

(iii) a more advantageous realisation of the company’s assets would be effected than on a winding up.

(2) Upon hearing the application for a judicial management order, the Court may dismiss the application or adjourn the hearing conditionally or unconditionally or make an interim order or any other order that the Court thinks fit.

(3) Any judicial management order made under subsection (1) shall direct that during the period in which the order is in force, the affairs, business and property of the company shall be managed by a judicial manager appointed by the Court.

(4) The costs and expenses of any unsuccessful application for a judicial management order made under this section shall, unless the Court otherwise orders, be borne by the applicant and, if the Court considers that the application is frivolous or vexatious, the Court may make such orders to redress any injustice that may have resulted as the Court thinks just and equitable.

(5) Nothing in this section shall preclude a Court—

(a) from making a judicial management order and appointing a judicial manager if the Court considers the public interest so requires; or

(b) from appointing, after the making of an application for a judicial management order and on the application of the person applying for the judicial management order, an interim judicial manager, pending the making of a judicial management order, and such interim judicial manager may be the person nominated in the application and may exercise such functions, powers and duties as the Court may specify in the interim order.

(6) A judicial management order shall not be made in relation to a company after the company has gone into liquidation.

(7) For the purposes of this Subdivision, “property” in relation to a company includes money, goods, things in action and every description of property, whether real property or personal property, and whether in Malaysia or elsewhere, and also obligations and every description of interest whether present or future or vested or contingent arising out of or incidental to property.

(8) The definition in section 466 of “inability to pay debts” shall apply for the purposes of this section as it applies for the purposes of Subdivision 7 of Division 1 of Part IV.