KUALA LUMPUR: Malaysia will review its corporate rescue and business rehabilitation frameworks by drawing insights from the United States’ Chapter 11 bankruptcy code, marking the next frontier of its national insolvency reform agenda.
Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said warned that premature liquidation destroys jobs, disrupts supply chains, and wipes out viable economic value.
Delivering her keynote address at the Forum on Asian Insolvency Reform (FAIR) 2026 today, she stressed that temporary insolvency does not signify a lack of economic viability.
"A company that cannot pay its debts today is not necessarily a company without an economic future," Azalina noted, pointing out that distressed firms often retain competitive products, skilled talent, and productive assets.
Azalina outlined five core reform pillars: encouraging early intervention, delivering practical debt-restructuring tools, protecting creditor rights, preserving employment, and expanding specialised court capacity.
However, she emphasised that corporate rescue must not morph into corporate immunity, framing the policy under a three-part mandate: "Rescue where possible. Restructure where viable. Resolve responsibly where necessary."
Azalina has directed the Malaysian Insolvency Department to benchmark US Chapter 11 procedures starting next year, focusing specifically on small and medium enterprises trapped in debt overhang.
The initiative aims to help smaller businesses monetise illiquid assets and restructure obligations under legal protection rather than being forced into winding-up petitions, preserving operational continuity across the wider domestic economy.