PASTPRESENTFUTURE SDN BHD (dahulunya dikenali sebagai Poly Ritz Development Sdn Bhd) PENCELAH 1. ) WAN SAZALI BIN WAN AB GHANI (BERTINDAK DALAM KAPASITI SEBAGAI PENTADBIR HARTA PUSAKA WAN AB GHANI BIN WAN YUSUF 2. ) KEH CHUAN SENG 3. ) TMH EVERISE SDN. BHD.

Case Significance

Illustrates the standing of unsecured creditors to be heard in judicial management proceedings, holding that rule 13 of the Companies (Corporate Rescue Mechanism) Rules 2018 does not confine the right of appearance to secured creditors and veto holders, and shows how a High Court may resolve a conflict between appellate authorities on the interpretation of those Rules.

This High Court decision at Kuala Lumpur concerns whether unsecured creditors may intervene in an application for a judicial management order. The applicant company had applied under the corporate-rescue provisions of the Companies Act 2016 to be placed under judicial management and to have a judicial manager appointed, and a number of parties, said to be unsecured creditors, applied for leave to intervene and be heard on that application. The point of law was whether they had the standing to do so. The court noted that panels of the Court of Appeal had reached conflicting conclusions on whether an unsecured creditor has sufficient locus to intervene in judicial management proceedings, and that it therefore had to choose between the competing appellate authorities. The dispute turned on the interpretation of rule 13 of the Companies (Corporate Rescue Mechanism) Rules 2018 and, in particular, whether that rule restricts the right of appearance to secured creditors and holders of a veto. The court held that rule 13 does not confine the right of appearance in that way, and that the mother statute, the Companies Act 2016, did not exclude the rights of unsecured creditors to be heard. Preferring the line of authority consistent with that reading, it granted the proposed interveners leave to intervene in the proceedings; given that ruling on the effect of rule 13, it found it unnecessary to address the other, collateral arguments that had been raised. The court's approach shows that the right to be heard in a corporate-rescue proceeding is not confined to those holding security or a statutory veto, and that a court faced with divergent appellate authority must reason to a principled choice guided by the language and purpose of the governing statute and rules. The judgment is a useful illustration of the standing of unsecured creditors to be heard in judicial management proceedings, and of how a High Court may resolve a conflict between appellate authorities on the interpretation of the Companies (Corporate Rescue Mechanism) Rules 2018.