A Judicial Management Order requires clear evidence of a company's insolvency and a credible proposal for survival or better realization, which was lacking in this case.

JUDGMENT

Wong Hok Chong JC:

Application

[1] This is Sin Soon Hock Sdn Bhd's ("Applicant") application for a Judicial Management Order ("JMO") on Grant Venture Sdn Bhd ("Company") pursuant to the Companies Act 2016 (" CA "). The Applicant is making this application as a creditor of the Company.

[2] I heard the application and dismissed it. These are the grounds for my decision

Judicial Management Provisions

[3] As the judicial management provisions are relatively new - they only came into force on 1 March 2018 - I thought it helpful to set out a broad framework of judicial management process that are relevant to this application. The statutory provisions for judicial management are found at ss 403 to 430 of the CA and the corresponding rules at rr 9 to 37 of the Companies (Corporate Rescue Mechanism) Rules 2018 ("Rules").

Overall Purpose

[4] The overall purpose of judicial management is to temper the winding-up of insolvent companies where the circumstances allow for a better outcome for the creditors and/or the company.

Mechanism

[5] The mechanism is to instate a moratorium on legal proceedings against the company and afford a court appointed judicial manager the opportunity to make a proposal to the creditors for the settlement of debts and/or the survival of the company.

Proposal - Applicant's Consideration

[6] The legal process begins with the filing of the judicial management application. There are pre-conditions before an applicant may file a judicial management application, namely, the applicant must consider that (s 404 CA ):

"(a) the company is or will be unable to pay its debts ("Insolvency"); and

(b) there is a reasonable probability of rehabilitating the company or of preserving all or part of its business as a going concern ("Survival") or that otherwise the interests of creditors would be better sewed than by resorting to a winding up ("Better Realisation")."

Filing Of Application

[7] Upon the filing of a judicial management application, without anything more, the moratorium on legal proceedings against the company is automatically triggered (s 410 CA ). Creditors with ongoing legal proceedings against the company will suddenly find them stayed. Unsecured creditors may not oppose the judicial management application (r 13(1)(b) Rules).

Hearing Of Application

[8] The application must be heard within 60 days of the filing of the application (r 9 Rules). Although there is no timeframe for the delivery of a decision, I think it is implicit that any continued hearing and decision should not be delayed.

Proposal - court's Consideration

[9] The conditions before a court can make a judicial management order are that (s 405(1) CA ):

(a) the court is satisfied that the company is or will be unable to pay its debts ("Insolvency"); and

(b) the court considers that the making of the order would be likely to achieve one or more of the following purposes:

(i) the survival of the company, or the whole or part of its undertaking as a going concern ("Survival");

(ii) the approval under s 366 of a compromise or arrangement between the company and any such persons as are mentioned in that section ("Scheme");

(iii) a more advantageous realisation of the company's assets would be effected than on a winding up ("Better Realisation").

Judicial Management Order

[10] When the court makes a judicial management order, the order places the company under the judicial management of a judicial manager and appoints the judicial manager (s 405(3) CA ). It is valid for 6 months (s 406(1) ), during which time the moratorium is maintained (s 411(4) ).

Proposal - Creditor's Consideration

[11] The judicial manager shall, within 60 days of the order, make his proposal to the creditors (s 420 CA ). It is for the creditors to decide whether to approve or reject the proposal. Unanimity is not required. The approval of 75% of the creditors in value shall bind all the creditors (s 421(2)-(3) ).

Proposal - Execution

[12] If the proposal is approved, the judicial man