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2025 MarsdenLR 3772
HIGH COURT MALAYA KUALA LUMPUR
REEBOK (M) SDN BHD – Appellant
Versus
DATO SRI RAM M S SARMA – Respondent
[Company Post (Winding-Up) No.: WA-28PW-609-12/2022]
The court affirmed that the wishes of the majority creditors take precedence over contributories in appointing liquidators, emphasizing judicial discretion in such matters.
Headnote:(A) Companies Act 2016 - Section 477 - Liquidation - Application to replace Official Receiver with private liquidators - Majority of creditors consented to the appointment, reinforcing the preference for creditors' wishes over contributories in appointments. (Paras 8, 9, 10)
(B) Procedural objections - Non-compliance with practice direction No 2 of 2018 does not invalidate the application; it is a technical breach only. (Par 7)
Facts of the case:
The application was made by a creditor to replace the Official Receiver with private liquidators following a winding-up order against the Respondent Company, which had significant assets. A contributory opposed this application, citing procedural defects.
Findings of Court:
The court favored creditor wishes in liquidator appointments, emphasizing discretion with weighted creditors' views.
Issues: The principal issue was whether the creditors or contributories should dictate the appointment of private liquidators.
Ratio Decidendi: The court affirmed that creditors' preferences take precedence in choosing liquidators, dismissing opposing procedural objections.
Result: Application to replace the Official Receiver with private liquidators allowed.
What is the court's ruling on whether creditors' wishes prevail over contributories in appointing private liquidators under s 477(1)(c) CA 2016?
What is the impact of procedural non-compliance with practice direction No 2 of 2018 on the validity of an application to replace the Official Receiver with private liquidators?
What are the circumstances under which the court exercises its discretion to appoint private liquidators in preference to the Official Receiver?
| Table of Content |
|---|
| 1. application to replace liquidator. (Para 1 , 2 , 3 , 4) |
| 2. creditor's meeting and voting outcomes. (Para 5 , 6) |
| 3. objections to the application. (Para 7 , 8) |
| 4. power of court under companies act. (Para 9 , 10) |
Introduction
[1] Enclosure 28 is the application by the Applicant to replace the Official Receiver ("OR") with private liquidators, namely Andrew Heng and Anoopal Kaur as Joint Liquidator of the Respondent Company.
[2] The Respondent was wound-up on 11 March 2016, following a petition filed by the Applicant. The OR was appointed as Liquidator of the Respondent.
[3] At the material time when the company was wound up, the company had two assets:
a) No 65, Medan Burhanuddin Helmi, Taman Tun Dr Ismail, 60000 Kuala Lumpur which is valued at RM8,000,000.00 on 8 July 2016; and
b) No 25, Lorong Sri Gambut 2, KJ Techno-Industrial Park, 42450 Klang, Selangor which is valued at RM500,000.00 on 8 July 2016.
[4] The creditors of the Respondent are as follows:
It is to be noted that the Intervener is not a creditor of the Respondent.
[5] On 27 January 2022, the OR conducted a creditor's meeting where the representative of the creditors and the Intervener attended. The purpose of the creditor's meeting was to appoint the nominated private liquidators to be appointed and to replace the OR for the purpose of the winding up of the Respondent.
[6] The Applicant avers that majority of the creditors have agreed to appoint the nominated private liquidators, namely, Anoopal Kaur and Andrew Heng ("nominated private liquidators") from Baker Tilly. However, the Intervener who is a contributory holding only one (1) share in the Respondent had voted in opposition to the appointment of the nominated private liquidators, to replace the Official Receiver during the creditor's meeting.
[7] The main objections raised by the Intervener are:
(a) The application is defective because it was filed by the proposed Liquidator and not by any creditor. I find this submission by the Intervener to be misconceived because encl 28 was filed by the solicitor representing My Square Development Sdn Bhd which is one of the four creditors of the Respondent. Furthermore, the affidavit in support of the application (encl 5) by Ng Hoe Heng, clearly states the application is filed by My Square Development Sdn Bhd.
(b) The Intervener also raised a preliminary objection against this application on the grounds that the applicant has used the wrong procedure. Thus, it contravenes practice direction No 2 of 2018 which requires the Applicant to file a Notice of Motion instead of an Originating Summons. I find this non-compliance does not prejudice the Intervener and does not render the application a nullity. It is just a technical non-compliance which does not go to the substance of this application (see the case of Zion Shipping Limited v. The Owners And/or Demise Charterers Of And/or Other Persons Interested In The Ships Or Vessels [2024] MLRHU 368). Thus, the preliminary objection is dismissed.
[8] In considering the merits of this application, the issue is whether the court has to favour the wishes of the creditors or the contributories, in the appointment of a private Liquidator. The cases have clearly held that where there is a difference between the wishes of the creditors and that of the contributories, the wishes of the creditors shall prevail. See the case of Syarikat Yong Thai v. Zung Zang Holdings Sdn Bhd .
[9] In the following cases the Applicant had relied on s 477 Companies Act 2016 (supra) to allow the application to replace the Official Receiver with the private liquidators nominated by the majority creditors.
a) Re: Rentak Arena Development Sdn Bhd; Spandand Sdn Bhd (applicant) & Another Case where there were 2 applications filed by 2 separate creditors of the company pursuant to s 477 Companies Act 2016 (" CA 2016") and the court had allowed one of the applications.
b) MCC Overseas (M) Sdn Bhd ( see Tab B of Enclosure 4
