Opposing a Judicial Management Application: "It is my right" says the unsecured creditor


Ranjan N.Chandran (Partner, Commercial & Construction Department)
Harneshpal Karamjit Singh (Associate, Commercial & Construction Department)

August 18, 2020

Hakem Arabi & Associates


The recent High Court decision of Goldpage Assets Sdn Bhd v Unique Mix Sdn Bhd [2020] MLJU 723 (“Goldpage Assets”) stems out of four applications to intervene by Gam Kam Sheng and twenty-seven (27) others; Tee Ah Kiat and two (2) others; Plusbury Sdn Bhd; and Unique Mix Sdn Bhd. The contention was that neither of the Proposed Interveners had the locus standi to appear at a hearing of an application to oppose a Judicial Management order (“JMO”) based on the following reasons:-

  1. (a)Neither party had appointed or may be entitled to appoint a Receiver or Receiver and Manager (Rule 13(1)(a) of the Companies (Corporate Rescue Mechanism) Rules 2018); and / or

  2. (b)Neither party is a Secured Creditor (Rule 13(1)(b) of the Companies (Corporate Rescue Mechanism) Rules 2018); and

  3. (c)Neither party is a Creditor, majority in number and value that represents 75% of the total value of creditors.

The grounds for the application relied by the 4 parties were as follows:

  1. Gan Kam Seng and twenty seven (27) others are bona fide purchasers who had entered into a sale and purchase agreement with Goldpage Assets Sdn Bhd (“Applicant”) for the purchase of properties in a project which the Applicant had undertaken to complete. Since the project was not completed, it was contended that they have an interest in the application by the JMO Application to revive project which will affect them;

  2. Tee Ah Kiat and two (2) others are judgment creditors and that the Applicant had failed to satisfy the said Judgment as well as their rights as owners to obtain vacant possession of properties purchased from the Applicant will be affected by the JM;

  3. Plusbury Sdn Bhd is a creditor of the Applicant by way of a Joint Venture Agreement (“JVA”) and an Additional Joint Venture (“SJVA”), both of which were executed for the purposes of a mixed development of a piece of land belonging to Plusbury as well as payments made to Bank Kerjasama Rakyat Malaysia Berhad on behalf of the Applicant to avoid legal proceedings as against the land;

  4. Unique Mix Sdn Bhd presented a winding up petition at the High Court on grounds that the Applicant owes them a debt and as a result a consent order was recorded at the hearing of the said petition. Subsequent to the consent order, Unique Mix Sdn Bhd initiated a civil action to recover the sums as per the consent order which the Applicant is contesting.

Issue Before the Court

In essence, the issue for consideration was whether unsecured creditors may intervene, and oppose an Ex Parte JMO Application.

Decision of the Court

The Learned High Court Judge was of the considered view that reading Part III Division 8 Subdivision 2 of the Companies Act 2016 specifically Sections 404, 405 and particularly 409, there was nothing preventing any party from attempting to oppose a JMO.

The Court relied on Hansard where there was no mention of any restrictions to an unsecured creditors opposing a JMO. It was not the intention of Parliament to restrict the same to only secured creditors.

The Court was further guided by the Federal Court decision of Pengusaha Tempat Tahanan Perlindungan Kamunting Taiping & Ors v. Badrul Zaman bin PS Md Zakariah [2018] 12 MLJ 49 whereby it was held:-

“In interpreting the provisions of an Act of Parliament, the trend now is to adopt such a construction as will promote the legislative intent or purpose underlying the provisions. This purposive approach has been given statutory recognition for the courts to adopt by virtue of s. 17A on the Interpretation Acts 1948 and 1967”.

It is on this basis that the Court took a purposive approach in interpreting the relevant sections of the Companies Act 2016 and the Companies (Corporate Rescue Mechanism) Rules 2018.

Accordingly, the Learned Judge was of the view that unsecured creditors were not shut out from a JM Hearing and that it was not Parliament’s intention to restrict the opposition of a JMO to only secured creditors.

The Court held that the discretion on whether any creditor could oppose a JMO was vested with the Court. The basic considerations set out by the High Court Judge was that the Court will decide on whether to grant a JMO based upon the criteria in Sections 404 and 405 of the Companies Act 2016 and whether they have been satisfied and proven by an Applicant. The views and objections of an unsecured creditors may be considered.

With regards to Rule 13 of the Companies (Corporate Rescue Mechanism) Rules 2018 where it states that an unsecured creditor cannot oppose a JM, the High Court judge stated that such rules had to read in conjunction with the parent act, Companies Act 2016.

The Companies Act 2016 does not prohibit any creditor from being heard at the JM and / or to oppose the JM. As such, any subsidiary legislation that is inconsistent with an Act (including the Act under which the subsidiary legislation was made) shall be void to the extent of the inconsistency as stated by the Federal Court in United Malayan Banking Corporation Bhd v Ernest Cheong Yong Yin [2002] 2 CLJ 413.

As the Companies (Corporate Rescue Mechanism) Rules 2018 does not have a procedure for intervention proceedings in a JM Application, the Court is guided by Rule 2 of the Companies (Corporate Rescue Mechanism) Rules 2018 as follows:-

“Where there is no specific procedure provided in these rules in respect of a voluntary arrangement or judicial management, the procedure provided in the rules of Courts 2012 [P.U.(A) 205/2012] shall apply.”

Thus, Order 15 rule 6(2)(b)(ii) applies. It is trite that the Court will allow an interested party to intervene if his legal rights and interest in relation to the subject matter of the action would be directly affected by any order which may be made in the action.


It is interesting to note that the decision of the High Court in Goldpage Assets has been followed recently by the Court of Appeal in Civil Appeal No. B- 02(IM)-1590-08/2019 involving a company known as Million Westlink Sdn Bhd. There are no Grounds of Judgment as yet from the Court of Appeal.

Be that as it may, the decision of the Court of Appeal undoubtedly settles the law in this area, that an Unsecured Creditor may have the voice to speak in making the rightful representation in Court in opposing a JMO.