Mohamed Shah Reza

On the court record

Mohamed Shah Reza appears in the corpus in corporate-insolvency litigation in the Court of Appeal (Mahkamah Rayuan), in a group of related appeals arising from the winding-up of a company and heard together. Appearing for the respondent in each, the appeals concerned allegations of undue preference, premised on voluntary settlements said to have been made without valuable consideration and not in good faith, and of fraudulent preference, together with an application for a validation order in respect of a payment rendered void because it had been made after the presentation of the winding-up petition. The appeals raised several questions of real importance to insolvency practice. They distinguished the distinct statutory requirements governing undue preference from those governing fraudulent preference; they asked whether proof of a dominant intention to prefer remains a necessary element of fraudulent preference; they examined the scope of the recognised exceptions where payments are made under genuine commercial pressure to avert the imminent collapse of the company; and they engaged the scope of the directors' duties and the circumstances in which a disposition of property after a winding-up petition may nonetheless be validated. These issues sit at the centre of the law that protects the general body of creditors by unwinding transactions that unfairly favour one creditor, or that dissipate assets, in the twilight period before a company fails. Because the appeals flowed from the same insolvency and were heard together, they constitute a single, closely argued body of work on the avoidance provisions of the companies legislation. The exception for payments made under genuine commercial pressure is a particularly finely balanced one, since a company on the brink of collapse will often pay a pressing creditor precisely in order to stay in business, and the law must distinguish that legitimate act of self-preservation from a deliberate preferring of one creditor over the rest. The profile is that of counsel engaged at the appellate level in the specialised field of insolvency avoidance, where the characterisation of a pre-liquidation payment as an unlawful preference, or as a legitimate response to commercial pressure, is decisive.