Hong Leong Islamic Bank Berhad

On the court record

An Islamic bank litigating summary judgment and foreclosure as a secured lender, and creditor questions in company insolvency — judicial management under section 414 and wage priority under section 31 of the Employment Act 1955.

Hong Leong Islamic Bank Berhad is an Islamic banking institution, and it appears in the corpus in the litigation of a secured lender and creditor — summary judgment on facilities, foreclosure and intervention to protect security, and its position as a creditor in company insolvency. It appears as plaintiff, applicant, aggrieved party and defendant in the High Court.

Recovery on facilities is the everyday work. In one matter the bank obtained summary judgment under Order 14 of the Rules of Court 2012, the court allowing the application with costs. In foreclosure litigation the bank sought to intervene and to stay auction proceedings and the completion of a judicial sale pending the disposal of an appeal to the Court of Appeal against the dismissal of a civil suit to recover the property, the question being whether a proprietary right existed such as to justify intervention.

The bank's creditor position brought it into company-insolvency proceedings. In one matter, an interim judicial manager had been appointed to a financially distressed company under section 414 of the Companies Act 2016, and the interim judicial manager sought the court's directions on the utilisation of monies held and on discontinuing the originating summons, raising a trusts question over monies owed. In another it was concerned with the applicability of section 31 of the Employment Act 1955, which gives employees priority for wages over secured creditors in specified court-ordered sales or receiverships, and whether that priority applies when a liquidator sells an unencumbered place of employment by private treaty. A land-law point also arose over whether the National Land Code prohibits a registered proprietor of freehold land from granting a lease. The bank's footprint therefore combines the mechanics of Islamic-finance recovery with the more difficult questions that arise when a borrower becomes insolvent and competing statutory priorities come into play.