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FINANCIAL
LAW - Danaharta Act
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| Related Topics : Banking Law . Offshore Banking Law . Broker Disputes . Commodities Law . Investment Terms . Raising Capital . Securities Law . Buying On Hire Purchase . Exchange Control Rules . Danaharta Act |
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AREA OF COMPARISON |
SPECIAL ADMINISTRATION (DANAHARTA) |
ADMINISTRATION (AUSTRALIA) |
ADMINISTRATION (UK) |
CHAPTER 11 (USA) |
| Affected person | Corporate
borrower of Danaharta Group and its security providers only |
Any company | Any company | Any company |
| Who can appoint |
Danaharta:
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Company itself, chargee or liquidator/provisional liquidator | Court on petition by the company, its directors or creditors | Generally company remains in possession, but court may appoint trustee on its own or on petition by an interested party |
| Oversight Committee | 3 members appointed by Minister of Finance, one each from Ministry of Finance, Bank Negara Malaysia and Securities Commission | None | None | None |
| Criteria | Inability or likelihood of inability to pay debts or fulfill obligations to creditors | Insolvency or likelihood of insolvency | Inability or likelihood of inability to pay debts | Generally, inability to pay debts as they become due |
| Purpose | Survival as going concern, more advantageous realization than winding up, or public interest | Maximizes chances of survival, or results in better return than winding up | Survival as going concern, more advantageous realization than winding up, or for voluntary arrangement or deed of compromise | Reorganization that results in creditors receiving at least as much as they would in a liquidation |
| Duration | From appointment until termination (generally upon implementation of workout proposal) | From appointment until termination (generally upon approval of workout proposal) | From appointment until termination in accordance with court order | Generally not applicable, debtor remains in possession |
| Role |
Control and management of assets and affairs:
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Control and management of assets and affairs:
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Control and management of assets and affairs:
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Generally not applicable, debtor remains in possession |
| Status | Agent of company under administration | Agent of company under administration | Agent of company under administration and court officer | Generally not applicable, debtor remains in possession |
| Protection | 12 month moratorium on all claims and proceedings, subject to extension | Moratorium on all claims and proceedings for duration of administration | Moratorium on all claims and proceedings for duration determined by court | Moratorium on all claims and proceedings for duration of Chapter 11 |
| Functions | Investigates assets and affairs and, as soon as reasonably practicable, submits workout proposal to Independent Advisor and Danaharta | Investigates assets and affairs, and within 21-28 days (unless extended) recommends to creditors workout, termination of administration or winding up | Investigates assets and affairs, within 3 months (unless extended) submits proposal to creditors and reports outcome to court | Company has 4 months to file plan of reorganization although period is usually extended. A trustee, if appointed, investigates assets and affairs, commences action against third parties and files a plan of reorganization. |
| Independent Advisor | Approved by Oversight Committee to review reasonableness of workout proposal taking into account interests of all creditors and shareholders | None | None | None |
| Workout proposal | Requires approval of Danaharta and majority in value of secured creditors, and subject to regulatory approvals | Requires approval of majority in number and value of creditors | Requires approval of 75% of creditors | Requires approval of impaired creditors (2/3 in value and 50% in number of each class) |
| Workout proposal | Requires approval of Danaharta and majority in value of secured creditors, and subject to regulatory approvals | Requires approval of majority in number and value of creditors | Requires approval of 75% of creditors | Requires approval of impaired creditors (2/3 in value and 50% in number of each class) |
| Binding nature | Once approved, workout proposal binds the company, its shareholders and creditors | Once approved, workout proposal binds the company, its shareholders and creditors (except secured creditors who opt out) | Once approved, workout proposal binds the company, its shareholders and creditors | Once approved, reorganization plan binds the company, its shareholders and creditors |
| Modifications | Must refer to Independent Advisor who will review reasonableness and decide whether to seek approval of secured creditors | Requires approval of creditors | Major modifications require agreement of administrator and creditors' approval | Only permitted if not yet substantially consummated and with court approval |
| Qualifications of Special Administrator | Individual who is an approved company auditor or has requisite experience or ability | Individual who is an accountant or has requisite experience or ability | Insolvency practitioners | Not applicable |
| Qualifications of Independent Advisor | Merchant bank, accounting firm or other entity with the requisite experience or ability | Not applicable | Not applicable | Not applicable |
| SPECIAL ADMINISTRATION | RECEIVERSHIP | LIQUIDATION |
Workout for purpose of achieving:
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To deal with assets of the company by enforcing security of a particular creditor chiefly for that creditor's benefit | Winding up leading to eventual dissolution of the company in liquidation |
| SPECIAL ADMINISTRATION | SECTION 176 SCHEME |
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