MARTIN BENCHER (MALAYSIA) SDN. BHD. v 1. ) SAPURA ENERGY BERHAD 2. ) SAPURA FABRICATION SDN BHD 3. ) SAPURA OFFSHORE SDN BHD

Case Significance

Illustrates the flexibility of the scheme-of-arrangement regime under the Companies Act 2016: consecutive convening (section 366) and restraining (section 368) applications are not inherently prohibited or abusive, and filing a proof of debt submits a creditor to the court's scheme jurisdiction.

This Court of Appeal decision concerns schemes of arrangement under the Companies Act 2016 and, in particular, whether a company may make consecutive fresh applications for convening and restraining orders. The appellant, a creditor company, challenged orders made in favour of a group of companies that had sought to reorganise their affairs by way of a scheme of arrangement. Both the appellant and the respondent companies are named. The appeal engaged the principal provisions on schemes of arrangement and their legislative purpose — the statutory mechanism by which a company in financial difficulty may compromise with its creditors under the supervision of the court.

Two questions of statutory construction were central. The first concerned section 366 of the Companies Act 2016 and whether it prohibits consecutive, fresh applications for convening orders — that is, whether a company whose first attempt to convene a creditors' meeting has lapsed or failed may return to court for a further convening order. The court held that section 366 does not prohibit such consecutive applications. The second concerned the requirements for a restraining order under section 368, which shields a scheme company from creditor action while a scheme is developed, and whether making consecutive restraining-order applications amounts to an abuse of the court's process.

The court also addressed the position of a creditor who files a proof of debt in the scheme process, observing that the act of filing a proof of debt would tantamount to the creditor submitting to the jurisdiction of the court in the scheme. The judgment surveys the newer statutory framework — including the provisions governing the status of a person as a creditor for voting, the manner and period for filing and adjudicating proofs of debt, and the accompanying guidelines under section 369B — that give structure to court-convened meetings. The judgment is a useful illustration of the flexibility the Companies Act 2016 affords a scheme company: consecutive convening and restraining applications are not, without more, prohibited or abusive, and the scheme regime supplies its own machinery for determining and challenging creditors' claims.