1. ) Globalmariner Offshore Services Sdn Bhd 2. ) BOOMSLANG TECHNOLOGY SDN. BHD. 3. ) Dynac Sdn Bhd v 1. ) TH HEAVY ENGINEERING BERHAD (DALAM PENGGULUNGAN) 2. ) TH HEAVY ENGINEERING BERHAD PIHAK TERKILAN 1. ) STAR KRIS SERVICES SDN BHD 2. ) NSF ENGINEERING SDN BHD

Case Significance

A notable illustration of the court's discretion to convert a creditors' voluntary liquidation into a court-supervised compulsory winding up under section 464 of the Companies Act 2016 where independent investigation and creditor confidence require it, choosing qualified liquidators over speculative objections.

This High Court decision in the Commercial Division at Kuala Lumpur concerns a rare "conversion" of a liquidation — the process by which creditors seek to move a company out of a creditors' voluntary liquidation and into a court-supervised compulsory winding up. The company, TH Heavy Engineering Berhad, was already in creditors' voluntary liquidation when three creditor companies petitioned for its compulsory winding up under section 464(1) and (2) of the Companies Act 2016 and for the appointment of private liquidators, while an opposing creditor separately applied to have its own nominee appointed instead. The court described the petition as only the second instance of such conversion proceedings. The issues included whether a voluntary winding up could be continued with due regard to the interests of creditors or contributories under section 464(2)(d), whether the court had a discretion to convert a voluntary liquidation into a compulsory one, whether the interim liquidators lacked independence and impartiality, whether the voluntary liquidation had been commenced for ulterior purposes, and whether the interests of the majority creditors and the demands of fair play and commercial morality favoured conversion. The court held that theoretical possibilities and hypothetical conflicts could not justify rejecting qualified, experienced insolvency practitioners in favour of a process that would delay essential investigative work and increase costs. It rejected the opposing creditor's application and confirmed the petitioners' nominees. In reaching that conclusion Atan Mustaffa Yussof Ahmad J weighed the demands of fair play and commercial morality underlying the insolvency regime, holding that creditors with legitimate grievances should not be denied their choice of qualified liquidators on the strength of unsubstantiated speculation, particularly where the alternative would have served the interests of parties whose own conduct was under investigation. The court ordered that the company be wound up by the court under section 464(1), appointed the petitioners' nominees as joint and several liquidators, and directed that the petitioners' costs and expenses be paid out of the company's assets. The judgment is a significant illustration of the court's discretion to convert a voluntary liquidation into a compulsory one where independent investigation and creditor confidence require it.