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COURT OF APPEAL PUTRAJAYA
MARTIN BENCHER (MALAYSIA) SDN BHD – Appellant
Versus
SAPURA ENERGY BERHAD & ORS – Respondent
[Civil Appeal No: W-02(IM)(NCC)-1879-11/2023]
Certainly. Based on the provided legal document, here are the key points:
The court clarified that a creditor submitting a proof of debt to a scheme of arrangement submits to the jurisdiction of the court, and subsequent proceedings within the scheme do not constitute an abuse of process if they are part of a continuous restructuring effort (!) (!) .
The appeal concerned the validity of the second application for a scheme of arrangement and whether it constituted an abuse of process, especially given the existence of earlier proceedings and orders (!) (!) .
The court emphasized that there is no prohibition against filing consecutive applications for convening orders under the relevant statutory provisions, and such applications are considered to be part of a single, ongoing restructuring process (!) (!) .
The expiry of an initial convening and restraining order does not prevent the filing of a new application for a fresh order, provided the new application is justified and meets statutory requirements (!) (!) .
The court found that the subsequent application (OS 121) was not an abuse of process, as it was a legitimate effort to continue the restructuring process after the expiry of the earlier orders, and the proceedings were properly initiated and authorized (!) (!) .
The law permits multiple applications for restraining orders within the statutory maximum periods, and these do not amount to an abuse if each application is justified and complies with the statutory conditions (!) (!) .
The court clarified that the maximum life of a restraining order, including extensions, is limited to a total of 12 months, with specific provisions governing extensions and the conditions for granting them (!) (!) .
The recent amendments to the relevant statutes introduce a cooling-off period of 12 months between restraining orders, which restricts the grant of new restraining orders if one was recently granted, but the previous extension of orders does not necessarily violate this period (!) (!) .
The court highlighted that the filing of proofs of debt and participation in proceedings constitute a submission to the court’s jurisdiction, which continues in subsequent proceedings related to the same scheme, thus binding the creditor to the process (!) (!) .
The submission of proofs of debt during the initial proceedings and their subsequent consideration by the court and creditors is consistent with the purpose of facilitating the company's restructuring efforts and does not amount to an abuse of process (!) (!) .
The court rejected the argument that debts arising after the cut-off date, as evidenced by a Settlement Agreement entered into later, should exclude the creditor from the scheme, emphasizing that debts existing before the cut-off date are the basis for admission, regardless of subsequent agreements (!) (!) .
The court also noted that the submission of proofs of debt based on debts that had already accrued prior to the cut-off date is sufficient to establish a creditor’s participation in the scheme, and the creditor’s conduct in submitting proofs is a voluntary submission to the scheme’s jurisdiction (!) (!) .
Overall, the court reaffirmed that multiple applications for scheme-related orders are permissible, provided each application is justified and statutory conditions are met, and that the process is aimed at aiding the company's financial recovery rather than an abuse of court procedures (!) (!) .
The appeal was ultimately dismissed, affirming the lower court’s decision that the proceedings and the submission of proofs of debt were legitimate and not abusive, and that the subsequent application for a new scheme order was lawful and consistent with the statutory framework (!) (!) .
Please let me know if you need further analysis or specific legal advice based on these points.
JUDGMENT
Introduction
[1] This appeal is against the dismissal by the High Court of the appellant creditor's application to be excluded from a proposed scheme of arrangement between the three respondent debtor companies (and 20 other related companies in the group) and their creditors.
[2] The appellant advanced two principal grounds. The first is that the scheme process pursued by the respondents constituted multiplicity of proceedings and was an abuse of process given the existence of an earlier proposed scheme application by the respondents, which also involved applications for restraining orders. Secondly, the appellant's debts fell outside the specified cut-off date for the filing of a proof of debt, on account of a Settlement Agreement, which post-dated the cut-off date.
[3] Having examined the appeal record and considered the submissions of parties, we unanimously decided that the appeal was without merit and therefore dismissed the same, for the reasons appearing hereinafter.
Key Background Facts
A) The Settlement Agreement Dated 23 February 2022
[4] The appellant, Martin Bencher (Malaysia) Sdn Bhd, whose principal business is the provision of shipping and freight services, had instituted two suits for unpaid invoices totalling RM409,242.37 - in Suit No BB-B52-15-10/2021 ("Suit 15") filed on 7 October 2021 against the first respondent - Sapura Energy Berhad ("Sapura Energy") and the second respondent - Sapura Fabrication Sdn Bhd, ("Sapura Fabrication"), as well as the third respondent - Sapura Offshore Sdn Bhd ("Sapura Offshore") (collectively, the "Three Sapura Entities"). As for Suit No BA-22NCVC-482-12/2021 ("Suit 482") filed on 7 December 2021, the claim by the appellant was for RM1,140,722.60 against the first and second respondents.
[5] Later however, in pursuance of the exchange of two letters dated 22 February 2022 and a letter dated 23 February 2022 between the solicitors of the parties, the appellant and the respondents agreed to a settlement to consolidate the separate debts owed to the appellant arising from Suit 15 and Suit 482 into a settlement sum of RM223,937.24, USD194,686.55 and EUR102,000.00 to be paid in seven monthly instalments from February to August 2022.
[6] This Settlement Agreement of 23 February 2022 contained a condition that upon any default in payment, the full outstanding amount would become immediately payable jointly and severally by the three respondents, being the Three Sapura Entities. The Settlement Sum was to be paid in instalments jointly and severally. Thus, the first instalment of EUR102,000.00 was paid to the appellant, and Suit 15 was withdrawn on 2 March 2022 with liberty to file afresh. However, the three respondents defaulted on the next instalment under the Settlement Agreement. Suit 482 was therefore stayed instead of withdrawn.
B) The Proposed Scheme Of Arrangement
[7] The Sapura Energy group of companies, inclusive of the three respondents ("the Group") operate globally as an integrated energy services and solutions provider. The Group had however been experiencing financial difficulties which the respondents claimed warranted relief from legal proceedings, albeit on temporary basis, which at the same time would proffer the Group the opportunity to formulate a scheme of arrangement with its creditors to restructure the respective applicants' financial affairs and liabilities ("the Proposed Scheme").
[8] Thus, very soon after the Settlement Agreement was inked, on 10 March 2022 the three respondents and 20 subsidiaries of the first respondent ("the Group companies") had under ss 366 and 368 of the Companies Act 2016 ("the CA 2016") obtained ex-parte orders in Originating Summons WA-24-NCC-148-03/2022 ("OS 148"); firstly, to convene creditor meetings within 12 months and secondly to restrain any actions against the Group companies for three months ("the OS 148 Convening and Restraining Orders"). This restraining order ("the RO") was on 8 June 2022
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