GOLDEN WAVE SDN BHD PENCELAH Sabah Development Bank Berhad PIHAK TERKILAN 1. ) BANK PEMBANGUNAN MALAYSIA BERHAD 2. ) VUN CHIT KHEN 3. ) RONNIE LAI TSIN LEE 4. ) Monteiro Gerard Clair 5. ) WONG KIT LEONG

Case Significance

Illustrates the pivotal role of a secured creditor's opposition in an application for judicial management under the Companies Act 2016: where two secured creditors objected, the court declined to make a judicial-management order and dismissed the company's application, reflecting the policy that a secured creditor should not readily be shielded against its wishes.

This High Court decision at Kuala Lumpur (Commercial Division), delivered by Judge Ahmad Murad bin Abdul Aziz, concerns an application by a company to be placed under judicial management and the effect of opposition by secured creditors. The applicant, Golden Wave Sdn Bhd, applied under the judicial-management provisions of the Companies Act 2016 to have a judicial manager appointed over its affairs, the object of judicial management being to give a financially distressed but potentially viable company a moratorium and an opportunity to be rehabilitated under an independent manager rather than being wound up. The respondent was Sabah Development Bank Berhad, and the application was opposed by two secured creditors of the company — Bank Pembangunan Malaysia Berhad and Sabah Development Bank Berhad.

The court dismissed the application. Central to its decision was the opposition of the two secured creditors, which the judicial-management scheme in the Companies Act 2016 treats as a significant obstacle: the statutory framework is structured so that the objection of a secured creditor to a judicial-management order carries considerable weight, reflecting the policy that a company should not be shielded from a creditor holding security over its property against that creditor's wishes, save in defined circumstances. Faced with the objection of the two secured creditors, the court declined to make the judicial-management order sought and dismissed the application. Given the short and clear basis of the decision, the court considered that there was no further need to write extended grounds. The outcome underscores that judicial management, for all its rehabilitative aims, does not override the bargain a secured creditor has struck for priority over the company's assets, and that the statutory scheme deliberately places the willingness of such creditors at the centre of the court's assessment of whether a rescue attempt should be allowed to proceed. The judgment is a useful illustration of the pivotal role that a secured creditor's opposition plays in an application for judicial management under the Companies Act 2016, and of the readiness of the court to refuse such an application where the secured creditors object.