PUTRAJAYA (Oct 27): Unsecured creditors do not have an automatic right to be heard in the court-supervised rehabilitation of troubled companies, the Federal Court ruled on Tuesday.
A three-member bench led by Court of Appeal president Datuk Seri Abu Bakar Jais unanimously upheld a 2024 Court of Appeal decision barring Bellajade Sdn Bhd to intervene in judicial management proceedings involving financially distressed CME Group Bhd.
The appeals court had overturned a Shah Alam High Court ruling allowing Bellajade to intervene.
In declining Bellajade's appeal, Abu Bakar declined to answer the four questions it posed, but the two remaining judges, Tan Sri Ahmad Terrirudin Mohd Salleh and Datuk P Ravinthran, answered in the negative.
Ahmad Terrirudin, a former attorney general, ruled that unsecured creditors must pass a certain threshold before they could apply to intervene.
Ahmad Terrirudin and Ravinthran emphasised on the need for the trial High Court judge to look at the facts of the case first before deciding to admit the unsecured creditor in.
All three judges said the recovery process of distressed companies should not be prolonged.
Abu Bakar ordered Bellajade to pay RM75,000 costs to Desa Tiasa Sdn Bhd, the unsecured creditor which had initiated CME Group's judicial management.
The apex bench also ordered Bellajade to pay RM25,000 costs to CME Group.
It is understood that several judicial management cases are waiting for the outcome of Bellajade’s appeal as guidance on the admissability of unsecured creditors into proceedings.
Desa Tiasa had allegedly invested approximately RM2 million in CME Group and sought judicial management in 2022 in a bid to save the company.
But Bellajade, which claims CME Group owes it RM6 million in rent, opposed the proceedings and sought permission to intervene.
The Shah Alam High Court in 2023 allowed this after Bellajade argued that its financial interests would be compromised by judicial management.
Desa Tiasa then escalated the case to the appeals court, which overturned the High Court decision.
Bellajade was represented by David Thomas Mathews, Michele Kaur, Koh Jo Vin and Tee Yee Man while Datuk Malik Imtiaz Sarwar, Jamie Wong, Wong Ming Yen and Gooi Sha Lene represented Desa Tiasa.
S Ravenesan and Janice Tay appeared for CME Group.
CME Group manufactures fire-fighting and safety equipment and also faces a separate winding up petition filed by Bellajade.