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2024 MarsdenLR 468
HIGH COURT SABAH & SARAWAK LABUAN
PROBIS FINANCIAL SERVICES PTY LIMITED – Appellant
Versus
CITY CREDIT INVESTMENT BANK LIMITED – Respondent
[Companies (Winding Up) No: LBN-28NCC-1-10/2023]
The court affirmed that a company can be wound up if it is unable to pay its debts, emphasizing the necessity for an experienced and impartial liquidator in complex liquidation cases.
Headnote:(A) Companies Act 2016 - Sections 465(1)(e), 466(a), 466(1)(c) - Labuan Companies Act 1990 - Winding-up petition filed against a licensed offshore investment bank for inability to pay debts - The Court found insufficient evidence to dispute the petitioner's claims and ordered the winding-up of the respondent with the appointment of Luke Anthony Furler as liquidator. (Paras 12, 24, 60)
(B) Liquidators - The Court emphasized the importance of the liquidator's independence, expertise, and experience in managing the liquidation process, favoring the interim liquidator's appointment over the Mayfair companies' nomination. (Paras 27, 41, 58)
Facts of the case:
The petitioner, a financial service provider, filed a winding-up petition against the respondent, an offshore investment bank, due to unpaid debts totaling over USD20 million and Euros 11 million.
Findings of Court:
The respondent was found unable to pay its debts, confirming the winding-up order under the Companies Act 2016.
Issues: The main issues included the respondent's inability to pay debts and the appointment of a suitable liquidator.
Ratio Decidendi: The Court ruled that the petitioner established the respondent's insolvency, necessitating winding-up, and highlighted the need for an experienced liquidator to manage complex international assets.
Result: The winding-up order was granted, with Luke Anthony Furler appointed as liquidator.
JUDGMENT
(Enclosures 1 And 126)
[1] The respondent company was ordered to be wound-up on 11 September 2024.
[2] On the same day, the Court (i) appointed one Luke Anthony Furler as the liquidator of the respondent pursuant to the amended encl 1, and (ii) dismissed encl 126 by which Mayfair Classic Fund Limited and Mayfair & Ayers Financial Group Limited, as creditors, sought an order, inter alia, that one Baltasar bin Maskor be appointed the liquidator of the respondent or failing which, the Official Receiver be so appointed.
[3] Mayfair Classic Fund Limited ("Mayfair Classic") and Mayfair & Ayers Financial Group Limited ("Mayfair & Ayers") - collectively referred to as "the Mayfair companies" - have since appealed against the decision appointing the said Luke Anthony Furler, and dismissing their choice of Baltasar bin Maskor or the Official Receiver, as the liquidator of the respondent.
[4] A narrative of the background facts is necessary to give context to the decisions of the Court .
Background Facts
[5] The petitioner, a company incorporated in Australia, carried on business as a financial and insurance service provider. It is in voluntary administration and there are 4 joint administrators.
[6] The respondent, a company incorporated in Labuan, is a licensed offshore investment bank registered with the Labuan Financial Services Authority ("LFSA").
[7] The respondent had a number of customers including the petitioner, whose monies it was to manage and invest.
[8] There was a commercial arrangement between the petitioner and the respondent whereby the petitioner was said to be owed USD20,635,399.78 and Euros 11,750,264.62 (as at 28 April 2023).
[9] On 28 April 2023, the petitioner, in need of funds on account of its own clients' withdrawal requests, unsuccessfully requested the respondent to withdraw the whole of its balances.
[10] Letters of demand and emails sent in successive months were to no avail, including the letter of demand dated 31 July 2023 and the follow-up letter of demand dated 7 August 2023 sent by the administrators of the petitioner.
[11] In September 2023, the administrators caused to be sent by hand another letter of demand to the respondent's addresses in Labuan and Kuala Lumpur by a process server who discovered that the respondent's premises in Kuala Lumpur had been vacated.
Winding-Up Petition Filed
[12] On 2 October 2023, the petitioner filed its winding-up petition against the respondent in the High Court of Sabah and Sarawak, Federal Territory of Labuan, on the basis that the respondent is unable to pay its debts within the meaning of ss 465(1)(e),466(a)and 466(1)(c) of the Companies Act 2016 .
[13] Shortly thereafter, the petitioner made an ex-parte application for the appointment of Luke Anthony Furler as the interim liquidator of the respondent. On 16 October 2023, the application was granted by Justice Faridz Gohim.
[14] The respondent, as well as Function Group Limited, applied to set aside the appointment of the interim liquidator. Function Group Limited was in support of the winding-up of the respondent but wanted one Datuk Tee Guan Pian as the liquidator.
[15] Both challenges over the appointment were dismissed by this Court which subsequently granted the interim liquidator's application for accounting and other records of the respondent and its wholly owned subsidiary, City Credit Capital (Labuan) Limited, whose liquidator was the said Datuk Tee.
Respondent's Inability To Pay
[16] It is clear that more than 21 days had lapsed since its letters of demand dated 22 June 2023 and 31 July 2023, and the respondent had failed to pay the sums of USD20,635,399.78 and Euros11,750,264.62 (as at 28 April 2023) or any part thereof or to secure or compound for it to the satisfaction of the petitioner.
[17] In fact, unbeknownst to the petitioner at that time, the LFSA had on 19 April 2023 restricted the respondent from making any withdrawal or transfer from any bank account, for non-compliance with mini
