Written by Poovarasan Nalechami
Introduction
This case focuses on the scope of participation by creditors in judicial management proceedings under the Companies Act 2016 and the Companies (Corporate Rescue Mechanism) Rules 2018 (‘the CRM Rules’).
The main issue was whether an unsecured creditor, including a judgment creditor with a substantial unpaid debt, has the right to intervene and be heard in an application for a judicial management order (‘JM’). The Court of Appeal was required to reconcile the procedural framework under the CRM Rules with broader principles of access to justice and creditor protection and to determine whether subsidiary legislation validly restricts the category of persons entitled to oppose a JM application.
Parties
The appellant was Desa Tiasa Sdn Bhd, an investor in CME Group Berhad and the applicant for the judicial management order. Desa Tiasa had invested approximately RM2 million in the company and sought judicial management as a corporate rescue mechanism.
The first respondent was CME Group Berhad, the financially distressed company that was the subject of the judicial management application.
The second respondent and proposed intervener was Bellajade Sdn Bhd, a former landlord of CME Group Berhad and a judgment creditor, having obtained a Federal Court judgment for rental arrears exceeding RM6 million. Bellajade was an unsecured creditor.
Brief Facts
Bellajade commenced a writ action against CME Group Berhad in 2014 for unpaid rental under a tenancy agreement. After prolonged litigation, the Federal Court in September 2021 ordered CME Group Berhad to pay Bellajade RM6,364,256.85 in rental arrears, together with additional rental sums for the relevant period. The judgment debt remained unsatisfied.
In April 2022, Bellajade and another creditor presented a winding-up petition against CME Group Berhad. Shortly before the winding-up hearing, Desa Tiasa applied to place CME Group Berhad under judicial management pursuant to ss 404 and 405 of the Companies Act 2016. As a result of the JM application, the winding-up proceedings were stayed.
Bellajade subsequently applied to intervene in the JM proceedings, contending that its rights as a judgment creditor would be severely prejudiced by decisions made during judicial management. The High Court allowed Bellajade’s intervention, relying on earlier authorities that appeared to permit unsecured creditors to be heard in JM applications. Hence, Desa Tiasa appealed to the Court of Appeal.
High Court Finding
The High Court held that Bellajade, although an unsecured creditor, was entitled to intervene in the judicial management proceedings. The court relied on the principle laid down in the Court of Appeal decision in Maybank Investment Bank Berhad & Ors v Million Westlink Sdn Bhd, which was said to allow unsecured creditors to intervene in JM applications.
The court further accepted the reasoning in Goldpage Assets Sdn Bhd v Unique Mix Sdn Bhd, which suggested that r 13 of the CRM Rules should not restrict the right of creditors to participate, as the Companies Act 2016 itself does not expressly prohibit unsecured creditors from being heard.
Court of Appeal Finding
The Court of Appeal unanimously allowed the appeal and set aside the High Court’s decision. It held that unsecured creditors have no locus standi to intervene in or oppose a judicial management application.
The Court of Appeal found that the High Court had erred in relying on Maybank Investment Bank v Million Westlink, as no grounds of judgment were issued in that case and its ratio decidendi could not be ascertained. As such, it did not constitute binding authority.
Issue To Be Tried
The key issue to be tried before the court is whether an unsecured creditor is legally entitled to appear, intervene, or oppose an application for a judicial management order, having regard to the Companies Act 2016 and the Companies (Corporate Rescue Mechanism) Rules 2018.
Court of Appeal Analysis
The Court of Appeal began by examining the statutory framework governing judicial management. Under s 409 of the Companies Act 2016, an application for a JM order must be dismissed if it is opposed by a secured creditor. The Act thus expressly confers veto rights on secured creditors, while remaining silent on the role of unsecured creditors.
The Court of Appeal then considered r 2 of the CRM Rules, which provides that the Rules of Court 2012 apply only where no specific procedure is prescribed. In the Court’s view, the CRM Rules constitute a self-contained procedural code for judicial management applications. Moving on to r 13 of the CRM Rules which expressly limits the category of persons who may appear to oppose a JM application which is persons entitled to appoint a receiver or receiver and manager and secured creditors within the meaning of s 409 of the Companies Act 2016.
The Court of Appeal held that r 13 is clear, unambiguous, and exhaustive. It does not permit unsecured creditors to participate in JM proceedings. As Bellajade was an unsecured creditor, it was statutorily barred from intervening.
The Court of Appeal rejected the reasoning in Goldpage Assets v Unique Mix, holding that there was no inconsistency between the Companies Act 2016 and r 13. The Companies Act’s silence on unsecured creditors does not amount to a prohibition on subsidiary legislation prescribing procedural limits. Applying settled principles of statutory interpretation, the Court of Appeal held that written law must be read harmoniously and that subsidiary legislation is valid so long as it does not contradict the parent Act.
The Court of Appeal emphasised that where statutory language is clear, courts must give effect to it. Any perceived unfairness or policy concern arising from the exclusion of unsecured creditors is a matter for legislative reform, not judicial intervention.
Conclusion
The Court of Appeal held that unsecured creditors, including judgment creditors, have no right to intervene or be heard in judicial management proceedings. Rule 13 of the Companies (Corporate Rescue Mechanism) Rules 2018 validly restricts participation to secured creditors and persons entitled to appoint receivers.
The appeal was allowed, the High Court’s order granting intervention was set aside, and Bellajade was ordered to pay costs of RM10,000 to Desa Tiasa Sdn Bhd and RM10,000 to CME Group Berhad.
Published on 24 December 2025