Judicial Management (“JM”) is a temporary court-supervised rehabilitation plan introduced through the Companies Act 2016 to assist financially distressed companies by affording an opportunity to rehabilitate and restore itselves back to profitability.
The Court appoints a Judicial Manager who is an insolvency practitioner to manage the company. The idea is that the Judicial Manager will work out a rehabilitation plan acceptable to the majority of creditors. An application by the Company or its Creditors for a JM Order should contain a nomination for the Judicial Manager, and premised on one of the following grounds:
- Inability of the company to pay debts
- To ensure survival of the company wholly or partly;
- A better way to realise the assets as compared to winding up; and
- Creditors will be in a better position than if the company was wound up. It is vital to bear in mind that there are criteria to be fulfilled, both upon filling of a JM application and upon the granting of a JM Order.
