When a company faces financial trouble, Judicial Management under the Companies Act 2016 (“CA 2016”) can provide a vital lifeline. It allows a company to restructure, protect its assets, and continue operating under the supervision of a court-appointed judicial manager. During this period, a moratorium stops creditors from enforcing debts without the court’s permission, giving the company a chance to put forward proposals that could benefit all stakeholders.
While secured creditors clearly have the right to oppose JM applications, the position of unsecured creditors has long been uncertain. Courts have taken different approaches:
- On one side, Leadmont Development Sdn Bhd v Infra Segi Sdn Bhd [2019] 8 MLJ 473 suggested that unsecured creditors generally do not have standing to intervene JM applications based on the strict reading of the provisions in CA 2016.
- On the other side, Goldpage Assets Sdn Bhd v Unique Mix Sdn Bhd [2020] MLJU 2013, Gigatech Engineering Sdn Bhd v EnGreen Sdn Bhd [2022] MLJU 2822, and Novabrite Lighting Sdn Bhd v Emrail Sdn Bhd (Bataranee Construction, proposed intervener) [2024] MLJU 298 recognised that unsecured creditors may intervene when their legal rights are directly affected. These cases emphasise fairness and the importance of protecting all creditors whose interests may be impacted by a JM application.
In the recent Shah Alam High Court decision in Ace Holdings Berhad v Koperasi Telekom Pahang Berhad & Ors [2025] CLJU 1679 and In Re: Ace Holdings Berhad; Amiliah Lathy Mohamed & Ors (Intervener) [2025] CLJU 1565 , where our Managing Partner represented several of the proposed interveners, the Court allowed unsecured creditors holding redeemable preference shares to intervene in the proceedings. The Court found that their legal rights were directly affected by the JM application, justifying their intervention.
However, the Court of Appeal in Desa Tiasa Sdn Bhd v CME Group Berhad & Anor [B02(IM)62604/2023] held that unsecured creditors do not have standing to intervene in JM applications. The decision in Desa Tiasa is still unsettled, as it is pending review at the Federal Court following the grant of leave to appeal.
It is noteworthy that ACE Holdings is currently appealing the High Court’s decision in light of the Desa Tiasa decision and the hearing for the appeal before the Court of Appeal is fixed on 28.01.2026.
This unresolved issue underscores the importance of careful planning in JM proceedings for both creditors and companies. The Federal Court’s decision of Desa Tiasa will provide much-needed clarity on the rights of unsecured creditors in corporate rescue in Malaysia.
Written by: Muhammad Azraai Bin Mohamed Yunos (Managing Partner)
