The court confirmed that asset sales during winding-up can be validated if proven beneficial to creditors and fair, upholding Section 223 of the Companies Act 1965.

[1] This Is the applicant's application dated 3 December 2013 for an order under s 223 of the Companies Act 1965 for inter alia the following Orders:

(1) That the applicant herein as Receiver and Manager ("R&M") of the respondent be granted leave to intervene in this proceedings and be made a party hereto;

(2) That the following Sale and Purchase Agreements ("SPA") and Assignment Agreement executed by the applicant as R&M and lawful Attorney of the respondent for valuable consideration for the sale of the following assets of the respondent be declared valid:

(a) SPA dated 25 October 2013 with Cam Plastic Industry Sdn Bhd in respect of an industrial lot with a factory and structures erected thereon and having an address at Lot No 19971 Kanthan Industrial Estate, Kanthan, 31200 Chemor, Perak Darul Ridzuan ("the Industrial Lot") for RM3,467,000;

(b) SPA dated 2 October 2103 with Heng Mimi and Teh Seng Poh in respect of a terrace house known as No 86 Jalan Naga Kanthan 4 Taman Sri Kanthan 31200 ChemorPerak Darul Ridzuan ("the Terrace House") for RM700;

(c) SPA dated 30 August 2013 with Puan Khor Yew Huan in respect of an apartment known as Parcel E8 Level 4 Eugenia Block, Greenhill Resort 39000 Tanah Rata Cameron Highlands, Pahang Darul Makmur ("the Apartment") for RM 180,000;

(d) SPA dated 25 October 2013 with Cam Plastic Industry Sdn Bhd in respect of various machinery and fixtures and fittings of the respondent ("the Machinery, Fixtures and Fittings") for RM764,000;

(e) Assignment Agreement dated 25 October 2013 with Cam Plastic Industry Sdn Bhd in respect of four trademarks of the respondent, (the Trademarks) for RM45,000.

(3) That all steps taken by the applicant and all documents executed by the applicant for and on behalf of the respondent prior to the date of the Order to be granted herein in respect of the disposal of the assets of the respondent pursuant to the terms of the said SPA and Assignment Agreement be declared valid;

(4) That the applicant be empowered to take such further steps and execute such other relevant documents where necessary for and on behalf of the respondent in disposing of the assets of the respondent pursuant to the terms of the said SPA and Assignment Agreement;

[2] On 10 April 2014, the Court allowed the applicant's application to intervene and allowed the validation orders The grounds of the decisions are as follows:

Brief Background Facts

[3] Petitioners had filed a petition dated 24 August 2005 to wound up the respondent. Essentially the Winding Up Petition was filed on the following basis:

(a) that the directors of the respondent, have acted in the affairs of the Company in their own interest rather than the interest of the members as a whole, or in any other manner whatsoever which appears to be unfair or unjust to the other members pursuant to s 218(1)(f) of the Companies Act 1965 ; and

(b) that the Court is of the opinion that it is just and equitable that the Company be wound up pursuant to s 218(1)(i) of the Companies Act 1965 .

[4] One of the main issues in the Winding Up Petition concern the creation of 1.3 million overstated stocks in the respondent company sometimes in or around the year 1995 without the knowledge of the petitioners.

[5] The Winding Up Judge made a finding that the director in the respondent who was responsible for the creation of the RM1.3 million overstated stocks was Lee Chin Yen, a non-executive director of the responden