The filing of proofs of debt under a scheme of arrangement constitutes submission to the court's jurisdiction, preventing creditors from seeking redress outside the statutory process.

Mohd Nazlan JCA (delivering judgment of the court):

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 FACTSThe settlement agreement dated 23 February 2022

[4]The appellant, Martin Bencher (M) 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 of 2021 (‘Suit 15’) filed on 7 October 2021 against the first respondent — Sapura Energy Bhd (‘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 of 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 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 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.

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 366368Companies Ac