KHEE SAN FOOD INDUSTRIES Sdn Bhd

On the court record

Illustrates the full arc of corporate rescue — restraining a winding-up by Fortuna injunction, judicial management, and the sanctioning and revisiting of a scheme of arrangement.

Khee San Food Industries Sdn Bhd appears in the reported judgments as a manufacturing company enmeshed in insolvency-restructuring litigation in the High Court (Mahkamah Tinggi), its matters spanning a Fortuna injunction, the conversion of proceedings and the remuneration of an interim judicial manager, and a scheme of arrangement. The decisions place the company within the corporate-rescue framework of the Companies Act 2016.

In one matter the company applied for a Fortuna injunction to restrain the presentation of a winding-up petition, the court asking whether there was a bona fide dispute of the alleged debt and whether the presentation of a petition would cause the company irreparable damage — the recognised basis on which a company can restrain a threatened winding-up where the debt is genuinely disputed. A connected decision concerned an application to convert an originating summons into a writ action, the court weighing whether substantial factual disputes required a trial, whether documentary evidence was sufficient for determination, and whether cross-examination under Order 38 rule 2 was an adequate alternative to conversion; the same decision addressed the reasonableness of an interim judicial manager's remuneration and whether a detailed statement of work sufficed without oral testimony.

A further decision engaged a weightier question of principle on schemes of arrangement: whether a court can set aside an earlier order that had approved a scheme under section 366(3) and (4) of the Companies Act 2016. The court canvassed two schools of thought on its jurisdiction after a sanction order — that the court cannot alter the substance of a scheme save for obvious mistakes or fraud, and that a sanction order operates as an order of court which the court may revisit under its inherent jurisdiction or the slip rule to reflect the true intention of the order, subject to a supervisory power. Across the matters, the company illustrates the full arc of corporate rescue — restraining a winding-up, judicial management and the sanctioning and revisiting of a scheme of arrangement.