The court established that an intervening party's claim must be recognized to qualify as a scheme creditor, necessitating a full trial for determination.

I. APPLICATION

This is an application in Enclosure (70) by PB Securities Sdn Bhd, the Intervener, for the following orders:

1 ;leave to intervene and to be added as a respondent to this Originating Summons;

2 ;leave to the Intervener to take or commence or continue with action in the High Court (including civil action, enforcement of judgment and/or execution proceedings) against the 1st Applicant in respect of its [2] liability to the Intervener under a Letter of Guarantee for Execution by Limited Company under the hand of its Authorised Officers in respect of the Margin Account of Autoways Development Sdn Bhd (ZZZ 1377) dated 7 October 1997 ("the said Guarantee");

3 ;by way of alternative to the second relief above, a declaration that the Intervener is a scheme creditor for the purpose of the proceedings herein and is entitled to attend and vote as an Unsecured Creditor of the 1st Applicant, at the Unsecured Creditors meeting of the 1st Applicant in these proceedings;

4 ;that the orders of the court dated 19.5.99 obtained by the Applicants herein, be set aside from the date of the hearing of this application; [3]

5 ;that the costs of this application be borne by the 1st Applicant abovenamed; and

6 ;such further and other relief as this Court deems fit.

Order in terms of prayer (1) was granted by consent of the Intervener and the Applicants. The Intervener has withdrawn prayer (2) and is now proceeding with prayer (3) only.

II. BACKGROUND

1. Intervener's Claim

The Intervener claims that the 1st Applicant is liable to the Intervener under a Guarantee dated 7.10.97 given by the 1st Applicant to secure the due performance of its wholly owned subsidiary, Autoways Development Sdn Bhd ("ADSB"). The Intervener had granted a margin trading facility to ADSB. The Intervener claims that as at 31.5.1998, ADSB owes RM50,596,678.07. [4]

2. Application under s.176 of the Companies Act 1965

The Applicants had on 19.5.1999 obtained an order pursuant to s.176 of the Companies Act 1965 , in this Originating Summons, to hold separate meetings of different classes of creditors of the 1st Applicant and the 2nd Applicant. The meetings are to be held for the purposes of considering and approving a "Proposed Scheme of Arrangement and Compromise Repayment" ("the Proposed Scheme") to be made between the Applicants and the Scheme Creditors.

The Applicants had, earlier, on 22.5.1998 obtained an order to restrain and to stay proceedings against the applicants under section 176(10) of the same Act ("the Restraining Order"). The Intervener is in the list of parties whose proceedings are restrained by the Restraining Order.

3. The Proposed Scheme

The Proposed Scheme compromises four schemes viz A, B, C and D. Relevant to the Intervener's Application is Scheme A [5] which is the scheme between the 1st Applicant and its Unsecured Creditors.

The relevant terms of Scheme A are as follows:

1 ;Interest and penalty charges accruing from 31.5.1998 until Scheme A becomes effective shall be completely waived. The claims by the 1st Applicant's Unsecured Creditors shall be settled as follows:

(i) ;The Unsecured Creditors shall waive 55% of Unsecured Debts held at the cut-off date;

(ii) ;The balance 45% of the Unsecured Debts shall be settled by the issuance of Irredeemable Convertible Preference Shares ("ICPS") at the issue price of [6] RM1.00 per ICPS on the basis of one ICPS for every RM1.00 of the debt recognised and accepted from the claims of the 1st Applicant's Unsecurdd Creditors as at the Cut-off Date.

2 ;The ICPS shall be listed and shall be convertible into ordinary shares of the 1st Applicant on the basis of one ordinary share for every two ICPS held on the 5th Anniversary date of issue of the ICPS.

3 ;Upon the sanction of the Proposed