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2022 MarsdenLR 242
HIGH COURT MALAYA KUALA LUMPUR
GLOBALCON HOLDINGS (M) SDN BHD – Appellant
Versus
AMBANK ISLAMIC BERHAD & ANOR – Respondent
[Originating Summon No:- WA-24NCC-366-08/2021]
The court balanced the interests of proposed intervenors against the need for a streamlined process in a scheme of arrangement, emphasizing jurisdictional constraints and the need for special circumstances to disrupt existing orders.
Headnote:(A) Companies Act 2016 – Sections 366(1) and 368(1) – Application by creditors seeking to intervene in a scheme of arrangement – Court grants leave to intervene but denies requests to set aside orders related to the scheme and restraining order – Proposed Intervenors failed to sufficiently justify their requests to alter the Orders made in the respective motions. (Paras 9, 11, 12, 15, 17, 25)
(B) Scheme of Arrangement – The role of the court at the convening stage is to assess whether there is an obvious roadblock to sanction the proposed scheme, rather than adjudicating on the merits of the claims in detail. (Paras 15, 18)
Facts of the case: Application to intervene by Proposed Intervenors regarding a proposed scheme that might affect creditors’ debts. Proposed Intervenors allege failure to list debts correctly and inadequate service of documents. (Paras 2-4)
Findings of Court: Leave granted for intervention; however, the requests to exclude the Proposed Intervenors from the scheme and set aside previous orders lack merit. (Paras 11-25)
Issues: Whether the Proposed Intervenors have demonstrated adequate grounds to set aside orders related to the scheme and restraining order. (Paras 11-12)
Ratio Decidendi: The court emphasized that the burden lies with the Proposed Intervenors to show exceptional circumstances to disturb the existing orders. (Paras 19-21)
Result: Applications dismissed.
JUDGMENT
Introduction
[1] Ambank (M) Berhad and Ambank Islamic Berhad ('the Proposed Intervenors') filed their applications in encl 27 and Enclosure 25 respectively, seeking the following prayers:
(1) Leave to be granted to the Proposed Interveners pursuant to O 15 r 6(2) of the Rules of 2012 ('the Rules') to intervene into this proceeding and the intitulements for this proceeding to be amended as needed to add the Proposed Interveners as Interveners;
(2) The Applicant shall serve all cause papers filed herein to the Proposed Interveners;
(3) The Orders in encl 1 and Enclosure 7 dated 25 October 2021 and 24 January 2022 respectively be struck out and/or set aside;
(4) Alternatively, the Proposed Interveners shall be excluded from being subject to the Orders in encl 1 and Enclosure 7 dated 25 October 2021 and 24 January 2022 respectively;
(5) Costs for the application to be borne by the Applicant to the Proposed Interveners; and
(6) Any further orders and reliefs that this Honourable Court deems fit.
Background Facts
[2] Ambank (M) Berhad had filed a Writ and Statement of Claim dated 6 August 2021in Suit WA-22NCC-359-08/2021 against the Applicant and 2 guarantors for the sum of RM 2,534,993.32 stated as outstanding as at 15 July 2021 in the Kuala Lumpur High Court ('the High Court Action') and Ambank Islamic Berhad has in turn filed a Writ and Statement of Claim in Suit No WA-B52M-202-08.2021 against the Applicant and 2 guarantors for the sum of RM 738,705.97 stated as outstanding and due as at 31 July 2021 in the Kuala Lumpur Session Court ('the Session Court Action').
[3] In respect of the High Court Action and the Session Court Action, counsel for the Applicant had forwarded settlement proposals to the Proposed Intervenors. However, the proposals were rejected by the Proposed Intervenors who had in turn made counter offers sometime on 24 December 2021.
[4] Unbeknown to the Proposed Intervenors, the Applicant had on 25 August 2021filed the present Originating Summons ('Enclosure 1') under s 366(1) of the Companies Act 2016 ('the CA 2016') seeking, inter alia, an order from this Court for leave to convene the meeting of its creditors or classes of creditors to consider and if deems fit, to approve with or without variation(s) a proposed scheme of arrangement and compromise between the Applicant and its Scheme Creditors based on its proposed scheme ('the Proposed Scheme') exhibited in the affidavit filed in support thereto.
[5] Further, in furtherance to the Proposed Scheme, the Applicant had on 29 September 2021 filed an application ('Enclosure 7') for an order restraining all legal actions commenced against the Applicant for a period of 3 months under s 368(1) of the CA 2016 ('the Restraining Order application').
[6] This Court had on 25 October 2021 granted the Applicant the prayers in encls 1 and 7. The terms of the Restraining Order application ('the Restraining Order') were notified to the Proposed Intervenors sometime during the case management of the High Court Action and the Session Court Action.
[7] For completeness, the Restraining Order was extended for a further 3 months sometime on 24 January 2022. A subsequent extension was granted on 25 July 2022.
[8] On 28 February 2022, the Proposed Intervenors filed the present encls 27 and 25.
[9] On 22 June 2022, this Court granted the Proposed Intervenors' applications for leave to intervene but declined to set aside the orders given in respect of encls 1 and 7, i.e prayer (c) of encl 27 and prayer 3 of encl 25. This Court also rejected prayer (d) to encl 27 and prayer 4 to encl 25 for the Proposed Intervenors to be excluded from being subject to the Orders in encl 1 and Enclosure 7 dated 25 October 2021 and 24 January 2022 respectively.
[10] Being dissatisfied with the dismissals of prayers (c) and (d) of encl 27 above and prayers 3 and 4 of encl 25 above, the Proposed Intervenor filed its appeal against the decisions in respect thereto.
Grounds For Decision
