MILLENNIUM MALL SDN BHD PENCELAH 1. ) LOW YEW GUAN 2. ) LEE OI KUAN 3. ) LOW YEW LIM 4. ) TEO PECK KWAN 5. ) DATO TS. HJ. MOHD ZAIDI llAMDIN dan 195 lain

Case Significance

Illustrates the application of the corporate rescue mechanism in Part IV of the Companies Act 2016: a judicial management order under section 405 requires the section 405(1) criteria to be satisfied on evidence, shareholders lack standing to apply as shareholders, and an unsuccessful application does not permanently bar a fresh one.

This High Court decision concerns an application by Millennium Mall Sdn Bhd, the manager of the retail units of a commercial complex known as M Square Mall in Puchong, for a judicial management order under section 405 of the Companies Act 2016. Two questions were before the court: whether a judicial management order should be granted where there was no documentary proof of an alleged "white knight" willing to pay off the company's debts, and whether a group of proposed interveners should be granted leave to intervene to oppose the application and to resume existing court actions against the company. The court set out the statutory scheme, noting that a judicial management order operates to impose a moratorium on all legal proceedings against the company until the application is dismissed, and that the court must scrutinise carefully whether the criteria in section 405(1) are met, whether the application is made bona fide, and whether there is a real prospect of rehabilitation. The court also addressed locus standi, observing that shareholders of the company lack standing to file a judicial management application in their capacity as shareholders, since the statute confines the application to the company or its creditor. It further recorded that an unsuccessful application does not permanently bar a fresh one, because the Act does not limit a judicial management application to a single attempt, provided the section 405(1) criteria are satisfied. On the facts, the court found that the applicant had not established a real prospect that the moratorium and judicial management would achieve a better outcome for creditors than a winding up, particularly given the absence of proof of the rescue funding relied upon. The court dismissed both the applicant's judicial management application and the proposed interveners' applications. The company and both sets of proposed interveners subsequently filed appeals to the Court of Appeal, and these were the grounds of decision for those three appeals. The judgment is a useful illustration of how the corporate rescue mechanism under Part IV of the Companies Act 2016 is applied where the rehabilitation case is unsupported by evidence.