AMBANK ISLAMIC BERHAD v WS RENT-A-CAR SDN. BHD.

Case Significance

Illustrates how an unsatisfied statutory demand triggers the presumption of insolvency under the Companies Act 2016 and what credible evidence a company must produce to resist a winding-up petition.

This High Court decision from the Commercial Division at Kuala Lumpur concerns a petition to wind up a company on the ground of an unsatisfied judgment debt, and the company's cross-application to strike out the petition. The petitioner, a bank, had obtained a judgment in default of appearance against the company in the Sessions Court, which the company never applied to set aside, so that it remained binding. The petitioner's solicitors then served a statutory demand for payment under section 465(1)(e) read with section 466(1)(a) of the Companies Act 2016, giving the company twenty-one days to pay; the company failed to comply, and the petitioner presented the winding-up petition. The company applied under Order 18 rule 19 of the Rules of Court 2012 to strike out the petition, contending that the parties had reached a settlement allowing it to pay by monthly instalments, that certain financed vehicles had been surrendered and should be credited against the debt so that the balance was much reduced, and that the petition was therefore an abuse of process. The central issues were whether the statutory presumption of insolvency under the Companies Act 2016 applied and, if so, whether the company had rebutted it, and whether a bona fide dispute or a concluded settlement made the petition an abuse. The court held that the presumption of insolvency was triggered by the unsatisfied statutory notice for a debt exceeding the threshold, that the company had produced no audited financial statements or other credible evidence of solvency, and that its haphazard part-payments did not discharge the judgment sum. It further found that no settlement proposal had in fact been accepted, so the petition was not an abuse of process. Applying the commercial insolvency test and finding the presumption unrebutted, the court allowed the petition and ordered the company to be wound up under section 465(1)(e) of the Companies Act 2016, appointed the Official Receiver as liquidator, and ordered costs of RM5,000.00 out of the company's assets. The judgment is a useful illustration of the presumption of insolvency arising from an unsatisfied statutory demand and of what a company must show to resist a winding-up petition.