insolvency

Ex Parte Appointment of Interim Judicial Manager over Khee San Food Industries

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On 19 November 2021, The Edge reported that the candy manufacturer, Khee San Food Industries Sdn Bhd (KSFI), has been placed under interim judicial management. KSFI is the wholly-owned subsidiary of the public-listed Khee San Bhd.

On 17 November 2021, the Court made an ex parte Order to appoint an interim judicial manager, Datuk Adam Primus Varghese Abdullah of Messrs ADAMPRIMUS, over KSFI. The interim judicial management of KSFI  in turn resulted in Khee San Bhd triggering Practice Note 17 (PN17). PN17 is essentially the financial distress criteria set by Bursa Malaysia Securities. KSFI’s assets account for over half of the total assets of Khee San on a consolidated basis.

I believe this is the first time a financial institution creditor has applied to place the debtor company under judicial management. I set out some of the guiding legal principles and the facts of this case.

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Case Update: Not Mandatory for Proposed Judicial Manager’s Affidavit

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The High Court in Re Federal Power Sdn Bhd (grounds of judgment dated 11 October 2021) granted a judicial management order over a high voltage cable manufacturing company. The Court dealt with the issue of whether the proposed judicial manager candidate must affirm an affidavit in support of the application or not.

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Case Update: Creditors’ Decision in Liquidation Governed by Majority in Value?

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The High Court in Coca Cola Refreshments Malaysia Sdn Bhd v Leejin Capital Sdn Bhd [2021] MLJU 1700 (grounds of judgment date 6 August 2021) invalidated the appointment of the liquidator in a creditors’ voluntary winding up. The Court ordered that instead, another liquidator candidate be appointed, where that candidate was nominated by a creditor holding a majority in value of the debt of the company.

This decision may cause uncertainty for future creditors’ voluntary winding up as well as other forms of winding up.

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Case Update: High Court Finds that Listed Companies Cannot Apply for Judicial Management

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The High Court in the judicial management application of Re Scomi Group Bhd decided that public listed companies cannot apply for judicial management. Hence, Scomi Group Bhd’s judicial management application was dismissed.

I have updated this article with the full grounds of judgment dated 4 October 2021.

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Case Update: Extensions to Judicial Management Order Set Aside

Lee Shih1 Comment

In the matter involving Macro Resources Sdn Bhd, the Shah Alam High Court has set aside the extensions of the judicial management order made beyond the period of the initial 12 months. This decision appears to confirm that a judicial management order in Malaysia can only be made for the initial 6 months and with a single extension of 6 months only (i.e. a maximum period of 12 months).

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Case Update: Priority of An Admiralty Claim Versus Insolvency

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Wong Chee Chien writes a case update on when an admiralty claim trumps insolvency.

More often than not, a creditor with an admiralty claim would take steps to arrest a ship or vessel of the debtor, for the purposes of selling it so that the proceeds of sale will be held as pre-judgment security for the creditor.

However, if the debtor subsequently goes into liquidation, what happens to the proceeds of sale from the arrested vessel? Should the proceeds be paid to the creditor, or should they be distributed to all unsecured creditors pari passu? These issues were dealt with by the High Court in Dan Bunkering (Singapore) Pte Ltd v The Owners of the Ship or Vessel “PDZ Mewah” & Anor (see grounds of judgment dated 9 August 2021).

Although this decision deals with several issues, this case update focuses on the question of whether the creditor’s admiralty claim trumps the insolvency regime of pari passu distribution among unsecured creditors. Continue reading →