I set out a case update on the Federal Court decision of Tee Siew Kai v Machang Indah Development Sdn Bhd (see the Grounds of Judgment dated 17 February 2020). The decision is on the law applicable to the grant of leave to sue a liquidator in his personal capacity. This decision reverses the Court of Appeal decision in Tee Siew Kai (as liquidator for Merger Acceptance Sdn Bhd) (in liquidation) v Machang Indah Development Sdn Bhd (in liquidation) (previously known as Rakyat Corp Sdn Bhd  2 MLJ 514.
This decision reiterates the importance of leave of the Court in order to avoid wasteful litigation against liquidators and to preclude unwarranted interference with the winding up process. There must be a prima facie case made out, the Court must evaluate the evidence to see if this has been met, and pecuniary loss suffered by the company must be shown. Continue reading →
Qualified persons can now apply to be licensed as liquidators, or also known as insolvency practitioners, in Malaysia. This allows for the licence holder to take on appointments as: (i) liquidator; (ii) receiver or receiver and manager; (iii) judicial manager; and (iv) a nominee in a corporate voluntary arrangement.
On 14 May 2019, I spoke at the Asset Recovery Asia Conference in Singapore. It was organised by Knect365 as part of its Asset Recovery series. I thoroughly enjoyed attending the conference, hearing from other fraud and asset recovery specialists, and meeting new friends.
I shared a panel with other lawyers from different jurisdictions, an investigator and a litigation funder to share our perspectives. The session was on how victims of fraud have to make a decision early on, without all the facts, about which recovery route to go down – litigation or insolvency proceedings. These strategic decisions can have implications on the remainder of the case. I set out below some of the views I shared on the panel session. Continue reading →
The Court of Appeal issued its Grounds of Judgment dated 11 December 2018 in the case of Ong Kwong Yew and others v Ong Ching Chee and others. It is a cautionary tale for liquidators on the grounds for their removal as liquidator and their conduct in terms of seeking fees for work done.
The conduct of the liquidator was serious enough for the Court of Appeal to remark that the liquidator ought to be sanctioned by the Malaysian Institute of Accountants or the Director-General of Insolvency.
The High Court in its Grounds of Judgment dated 20 June 2018 in Abdul Rahman bin Ismail v Pembangunan Qualicare Sdn Bhd (Penang High Court Winding Up Petition No. 28-6-01/2013) made an interesting observation when there are competing nominees to be appointed as liquidator in a court winding up.
The High Court raised the possibility of a need for a mini trial in order to test the suitability of the two competing liquidator nominees. Continue reading →
In a Media Release on 23 May 2018, Malaysia’s Ministry of Finance announced that it had met with 1MDB’s Board of Directors. The directors confirmed that 1MDB was insolvent and was unable to pay its debts. 1MDB’s debts may be in the region of RM42 billion. This figure is based on the declassified Auditor General Report issued in 2015.
With this tremendous amount of debt, I touch on one aspect of directors’ liabilities. The directors and other officers of 1MDB, when allowing 1MDB to take on so much debt, can be held personally liable for these debts. Continue reading →