The court emphasized that a proposed scheme under the Companies Act must contain sufficient particulars to demonstrate its viability and merits for consideration by creditors.

Mohd Radzi Abdul Hamid J:

Introduction

[1] This a decision on the Applicants' application via encl 1 for:

(i) an order pursuant to s 366(1) of the Companies Act 2016 granting leave to the Applicants to convene a Creditors' Meeting for the purpose of presenting for approval a scheme of arrangement between the Applicants and its respective Scheme Creditors; and

(ii) a restraining order pursuant to s 368(1) of the Companies Act 2016 to stay all proceedings initiated by the Applicants' creditors.

Background

[2] The Applicants are manufacturers of parts and components in the automotive industry collectively known as the 'SPA Group'. They are inter-related via a common majority shareholder Dato Sri Lim Teck Boon who holds in excess of 95% shareholding in the Applicants. The Applicants have experienced serious financial issues, amongst others, poor cashflow and cost overruns as a result of the Covid-19 pandemic and that has impacted its financial well-being and its commitments to a number of financial institutions.

[3] There was an earlier application for judicial management and proposed scheme of arrangement ("Previous Scheme") via Originating Summons No. MA-28JM-1-11/2023 by the 1st, 3rd, 7th and 9th Applicants ("JM Application") filed on 20 November 2023. There was opposition to the scheme by their creditors including secured creditors and it led to the withdrawal of that scheme on 5 April 2024.

[4] Enclosure 1 is the application is for leave to convene a meeting of creditors for the purposes of considering and approving a scheme of compromise and arrangement under s 366(1) of the Companies Act 2016 and for a restraining order under s 368(1) of the which was filed on 15 July 2024 ("Application").

[5] The current Application proposes a revised restructuring scheme of arrangement ("Revised Scheme") to repay the SPA Group liabilities to the Scheme Creditors. The Revised Scheme states that the Scheme Creditors are divided into 2 groups, first are the secured creditors which consist of Ambank (M) Berhad, Public Bank Berhad, RHB Bank Berhad, Malayan Banking Berhad ("Malayan Banking"), OCBC Al Amin Bank Berhad ("OCBC AL Amin"), OCBC Bank (Malaysia) Berhad ("OCBC"), Affin Bank Berhad ("Affin"), HSBC Amanah Malaysia Berhad ("HSBC"), CIMB Bank Berhad ("CIMB") and Standard Chartered Bank Malaysia ("Standard Charteed"). Secondly, the unsecured creditor which consist of only Lembaga Hasil Dalam Negeri ("LHDN"). The detailed breakdown of each of the Applicants' liability to the secured creditors and the unsecured creditor appears in Exhibits A-15, A-16, A-17, A-18, A-19, A-20, A-21, A-22, A-23 in encl 5.

[6] The secured creditors OCBC A! Amin, OCBC, Affin, HSBC, CIMB, Standard Chartered, Malayan Banking and the unsecured creditor LHDN had applied to intervene and oppose this Application and that application was allowed by this Court on 6 November 2024 ("Interveners"). HSBC Amanah and Malayan Banking were not present at the hearing of this Application.

The Revised Proposed Scheme

[7] Briefly, the Revised Scheme which appears in Exhibit A-14 of Enclosure 5 proposed that:

(i) in respect of the secured creditors, each of the secured creditors will receive a 100% return on their respective outstanding principal sum and there will be waiver of late payment charges, penalties and interest accrued until the effective date of the proposes scheme; and

(ii) in respect of the unsecured creditor, the outstanding amount will be settled via an instalment as detailed in the Revised Scheme.

[8] The Revised Scheme consists of a number of components, namely the Asset Backed Securities Bond Programme, Sale & Leaseback Transaction, Bond Issuance and Moratorium Request.

[9] The Applicants state that the present Revised Scheme has been revised with sufficient particularity, made in good faith and in the interests of the scheme creditors. The Revised Scheme involves preservation of the principal amount without any haircut, the value of the Applicants' assets will be unloc