Law updates - Company (Malaysian law unless otherwise stated)
HC = high court
COA = court of appeal
FC = federal court
Metroplex Berhad & 15 Ors v Morgan Stanley Emerging Markets Inc & 3 Ors (RHB Sakura Merchant Bankers Berhad & 10 Ors - intervener) [HC]
Section 176(10A) of the act not only provides that an ro may only be granted if there was a proposal for a scheme of compromise which involved creditors representing at least one-half in value of all the creditors, but it also stipulates that an ro may only be extended for a longer period "if and only if" there was a "good reason" to do so. The words "good reason" have been construed by the courts to mean, inter alia, where a bona fide scheme of arrangement was present; the scheme of arrangement presented must not be such that is bound to fail; and that the interest of creditors, i.e. the beneficiaries under the proposed arrangement, were safeguarded. On the facts of the case, the applicants did not seem to have a bona fide scheme of arrangement to achieve their supposed goal of settling the debts. There had been no such compromise or arrangement proposed and all the requirements stipulated in subsection (10A) had not been met. All the provisions of s 176 of the act must be met afresh (which the applicant had not done) in order to empower the court to grant any extension of the ro. As at the date of the instant application, the applicants only managed to show that only 48.52% of the creditors have agreed to the application for extension and that only "some" creditors have given their approval to the proposed scheme itself whereas s 176(10A) requires approval of at least 50% in value of creditors before the court could grant an ro it was apparent that the applicants had not met the conditions in 10A and they would not be in a position to produce a scheme of compromise or arrangement that was viable, reasonable, or feasible even if their fifth application to extend the life of the ro was granted.