Who Should Win The Appointment ' The Tale Of Competing Private Liquidators

• Published date: 06 July 2021
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law
• Law Firm: SKRINE
• Author: Wong Chee Lin and Claudia Cheah

Faced with competing applications to appoint private liquidators, the court in the case of MCC Overseas (M) Sdn Bhd v TY Land & Development Sdn Bhd (Sabah Development Bank Bhd, applicant) and another case [2020] MLJU 2522made its decision based on the following factors:

1. The experience of the Private Liquidator ("PL");
2. The fees of the PL (in accordance with Table C Second Schedule of the Companies (winding Up) Rules 1972 i.e., liquidators fees to be based on the Company's assets realised which the Court finds will be less burdensome on the winding up process and more equitable to the creditors and contributories)

The Court also held that the argument that the appointment of a PL will help to ease the burden of the Official Receiver ("OR") is not a factor to be considered.

Background Facts

Following the winding up of a company, there was a creditors' meeting to appoint a liquidator. Three creditors were present: SDB, FBSB and MCC Overseas. SDN and MCC Overseas voted in favour of Datuk Afrizan whilst FBSB had abstained.

FBSB disagreed with SDB's proposed private liquidator. FBSB applied to appoint two liquidators: Datuk Ooi Woon Chee and Mr Tam Kok Meng.

The issues before the court were:

1. whether the court was bound to accept wishes of creditors or contributories;
2. whether appointment of private liquidator to "assist and ease the burden" of OR was an acceptable ground; and
3. whether Mr Tham Kok Meng is in a position of conflict as he was employed by Arthur Andersen who was the auditor for the holding company of the Company known as Fajarbaru.

Decision

The Court referred to s521 of the Companies Act 2016, Rule 19 of the Companies (Winding Up) Rules 1972 (WUR), and took note of s477 (1)(c) of the Companies Act 2016:

"From the above sections in the Companies Act, it is my view that under section 521 the Court is not bound to accept the wishes of the creditors or contributories but only to have 'regard' to the same when deciding any outcome of a meeting held pursuant thereto, which in the matter before me is the outcome of the Creditors Meeting, and that Rule 19 of the WUR is of course to be subject to such section. I also hold that section 477(1)(c) allows this Court to make such determination on the appointment of a liquidator, taking into account, of course, the entire circumstances of the matter before me, thus giving this Court the discretion to decide on the appointment of the liquidator."

JC Nadzarin Wok Nordin held that FBSB had no notice of Datuk...