WA-28NCC-347-04/2022
High Court of Malaysia10 Jan 2023
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“IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION) COMPANIES (WINDING-UP) NO.: WA-28NCC-347-04/2022 In the matter of the Companies Act, 2016 And In the matter of Section 465(1)(e) and Section 466(1)(c) of the Companies Act, 2016 And In the matter of SERBA DINAMIK GROUP BERHAD [Company Registration No. 20”
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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION) COMPANIES (WINDING-UP) NO.: WA-28NCC-347-04/2022 In the matter of the Companies Act, 2016 And In the matter of Section 465(1)(e) and Section 466(1)(c) of the Companies Act, 2016 And In the matter of SERBA DINAMIK GROUP BERHAD [Company Registration No. 200401024953 (663460-T)]
1
HSBC AMANAH MALAYSIA BERHAD (Company No. 200801006421 [807705-X])
2
AMBANK ISLAMIC BERHAD (Company No. 199401009897 [295576-U])
3
BANK ISLAM MALAYSIA BERHAD (Company No. 198301002944 [98127-X])
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MIDF AMANAH INVESTMENT BANK BERHAD (Company No. 197501002077 [23878-X]) S/N 7jcCPzX1jkKgulw3IjdCfw
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STANDARD CHARTERED SAADIQ BERHAD (Company No. 823437-K)
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UNITED OVESEAS BANK (MALAYSIA) BERHAD (Company No. 271809-K) … PETITIONERS AND SERBA DINAMIK GROUP BERHAD … RESPONDENT (Company Registration No. 200401024953 (663460-K)] S/N 7jcCPzX1jkKgulw3IjdCfw JUDGMENT INTRODUCTION [1] The Respondent filed a summons in chambers in Enclosure 148 for the following orders:
a
That the hearing of the petition herein be adjourned for such period and/or such other date as this Honourable Court deems fit;
b
That in furtherance of paragraph (1) (a) above, a further case management date be fixed and/or such other directions as this Honourable deems fit; and
c
Other reliefs and/or orders that this Honourable Court deems fit and necessary. [2] The first four (4) grounds in support of this application are similar to those submitted in the postponement application by Efire Capital Holdings Limited (“Efire”), while the remainder two (2) are new. These are, that:
a
Efire, which is incorporated in Abu Dhabi is a joint venture between Liwa Investment Holdings (51%) and Serba Dinamik International Limited (49%). Notwithstanding the shareholding, the economic interest between the two (2) shareholders is on a 50:50 basis.
b
One of the businesses of Efire is to develop a data centre in Abu Dhabi called Future Digital Data Systems (“FDDS”).
c
Liwa Investments Holding, as the 51% shareholder of Efire is prepared to sell Efire including the businesses within Efire, which include, amongst others, FDDS and Block 7 Investments LLC.
d
Efire is in discussions with potential buyers with a view to sell Efire and its businesses for an estimated proposed net consideration of US$700 million. S/N 7jcCPzX1jkKgulw3IjdCfw
e
The sale of the assets within Serba Dinamik Holdings Berhad (“SDHB”) group is likely to produce a return in excess of the amount owing to creditors of SDHB group.
f
An orderly sale outside of winding-up will be conducive towards realising maximum value for such assets. BACKGROUND FACTS [3] This application came up for hearing on the same day as the hearing of Enclosure 1, which is the petition to wind-up the Respondent. [4] This petition was filed on 26.04.2022 and by the hearing date of the petition on 10.01.2023, all the cause papers were in order and the Registrar’s certificate under rule 32 of the Companies (Winding-Up) Rules 1972 (“Winding-Up Rules”) had been obtained by the Petitioners. This notice of motion was only filed four (4) days (in actual fact two
2
working days) before the date of hearing of the Petition. On the hearing date, all the Petitioners strenuously opposed the application to postpone the hearing of the petition. [5] The winding-up petition was case managed on 08.06.2022 and again on 05.12.2022 and on the last case management day, the date of hearing of the petition was fixed for 10.01.2023. Despite the fact that the hearing date was fixed by the second case management date on 05.12.2022, the Respondent only chose to file this application to adjourn the petition four (4) days before the hearing date of the petition, thus, depriving the Petitioners of any opportunity to file their affidavits in reply or submissions to assist this Court. [6] Whilst the winding-up petition was underway, the Syndicated Financiers (i.e. the Petitioners) applied for the appointment of Victor Saw Seng Kee of Pricewaterhouse Coopers Advisory Services Sdn Bhd as the Interim Liquidator (“IL”) of Serba Dinamik Holdings, Serba Dinamik International, Serba Dinamik Sdn Bhd and Serba Dinamik Group Bhd (all jointly referred to as “Serba Companies”) which includes the Respondent and three (3) other companies against which similar petitions for winding-up had been filed. S/N 7jcCPzX1jkKgulw3IjdCfw [7] Meanwhile, the Serba Companies, including the Respondent, had proposed a scheme of arrangement under section 366 of the Companies Act 2016 (“CA 2016”). The Serba Companies and the Petitioners then entered a consent order, whereby the IL application and the winding-up petition were stayed subject to the Serba Companies’ compliance with the terms of the scheme consent order recorded in the above-mentioned scheme proceedings. [8]
Preamble
Pursuant to court-convened meetings held by the scheme companies, the terms of the stay order, scheme order and scheme consent order were approved by a significant majority of the scheme creditors and therefore, the scheme companies applied for a court sanction of the approved schemes. [9] The Petitioners aver that the Respondent and the Serba Companies breached the terms of the stay consent order and the scheme order by failing to make payment of the first tranche payment due on 12.08.2022, which remains unpaid. Thereafter, on 09.11.2022, the schemes were withdrawn by the Serba Companies. [10] This Court allowed the application by the Petitioners for the appointment of the IL for the Serba Companies (including the Respondent) on 23.08.2022. No appeals were filed by the Serba Companies against the court order dated 28.03.2022. [11] The Serba Companies filed an application on 25.08.2022 (“the stay application”) to stay execution of the court order to appoint an IL and/or discharge the IL. On the hearing date of the stay application, fixed for 15.09.2022, the Serba Companies requested an adjournment of the hearing of the application, and following objections from the Petitioners, the solicitors for the Serba Companies again withdrew their applications and this Court awarded costs of RM50,000.00 for each petition to be paid by the executive directors. It should be noted that this is the second withdrawal to their application after the earlier withdrawal of the scheme of arrangement. If one were to include the withdrawal of the judicial management application on 24.03.2023 by the other companies which comprise the Serba Companies (except Serba Dinamik Holdings) there were three withdrawals of various applications by the Serba Companies at the last minute. [12] Thus, one can see a clear pattern of conduct by the Serba Companies, including the Respondent, in filing unsustainable S/N 7jcCPzX1jkKgulw3IjdCfw applications and filing withdrawals at the last minute before the hearing of their own applications. [13] It is, thus, hardly surprising that on the hearing date of the petition, all Petitioners objected to the notice of motion by the Respondent to postpone the hearing of the petition. After hearing oral submissions by the parties, this Court dismissed the application by the Respondent in Enclosure 113. THE LAW [14] The law governing an application to postpone the hearing of petition under section 469(1)(b) of the Companies Act 2016 (“CA”) can be found in my earlier grounds dismissing a similar application in Enclosure 103 by Efire. Thus, for the sake of brevity, I shall not repeat it here. FINDINGS BY THE COURT [15] The grounds given by the Respondent in paragraph 2 (a) to (d) are identical to the grounds given by Efire in its application for postponement, which can be found in my earlier grounds in dismissing said application by Efire. Thus, I will confine my findings here to the two (2) additional grounds given by the Respondent, which are:
i
The the sale of assets within the Serba Companies is likely to produce a return in excess of the amount owing to creditors of the Serba Companies; and
II
(ii) That an orderly sale outside of the winding-up will be conducive towards realising the maximum value of such assets. [16] As I have said in my grounds in dismissing Efire’s application for postponement, which equally applies to the two (2) additional grounds above, these are bare averments not supported by any evidence. There is no evidence given by the Respondent to show that any sale by a court-appointed Liquidator would not be orderly. Being an officer of the court, a Liquidator is duty bound to get the best value for the assets of the Serba Companies. As was stated by the judge in Re Demaglass Holdings, quoted in my S/N 7jcCPzX1jkKgulw3IjdCfw earlier grounds, licensed insolvency practitioners would be answerable to a claim in damages if they were negligent in selling the company’s assets at an undervalue. [17] As against the Respondents unsubstantiated averments of having assets which, upon sale, are likely to produce returns in excess of the value owing to creditors of the Serba Companies, the Petitioners have produced evidence which calls into question the veracity of the Respondent’s averment of having assets more than its debt. [18] The Petitioners have produced four (4) progress reports by the IL and the conclusions reached are that the Serba Companies are unable to pay their debts or meet their operating expenses and are in a deficit position of RM44.6 million as at 07.01.2023. The companies’ directors have failed to furnish the IL with the mandatory statement of affairs since the appointment of the IL on 23.08.2022 in breach of section 484 of the CA 2016 and para 3(b) of the order appointing the IL. (Exhibit SD 12 from page 2568 onwards in Enclosure 9-11). [19] The refusal of the Serba Companies to provide a statement of affairs to the IL despite this being a mandatory requirement shows a lack of transparency in the Serba Companies’ financials. [20] Additionally, some of the assets alleged to belong to the Serba Companies are also suspect. The assets inter-alia relied on by the Respondent include:
i
Pengerang Eco Industrial Park where the Serba Companies ownership is being challenged by Izin Budi Sdn Bhd and Perisind Samudra Sdn Bhd.
II
(ii) Four (4) parcels of lands at Teluk Ramunia which are subject to a claim by Malaysia Building Society Berhad following an order for sale. [21] For the reasons aforesaid, I do not find the content of the affidavit in support to be credible. [22] Therefore, I find that it is not in the interest of the creditors of the Respondent to delay the hearing of the winding-up of the Respondent indefinitely, more so that it is beyond doubt that the S/N 7jcCPzX1jkKgulw3IjdCfw Respondent is “hopelessly commercially insolvent” as is evident in the numerous unsuccessful attempts to rescue the Serba Companies, including the failed schemes of arrangement and judicial management application. [23] For the above reasons, I dismiss the application in Enclosure 148 with no order as to costs. Dated 12th April 2023 …………t.t…………….. Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur Solicitors: For the Petitioners : Jeyanthini Kannaperan (Sharon Kaur Jessy with her) Tetuan Shearn Delamore & Co For the Respondents : Mak Lin Kum (Tan Xu Qie with him) Tetuan Syed Ibrahim & Co For HSBC Bank Malaysia Berhad (Bilateral Financier): Benjamin John Dawson (Tan Kah Weng with him) Tetuan Benjamin Dawson For Salur Inspirasi Sdn Bhd : Eugene Choong Kuok Yuen Tetuan PC Choong & Company For Izin Budi Sdn Bhd & Perisind Samudra Sdn Bhd : Khairunnajihah Aqila binti Mohd Sofian Tetuan Azmi & Associates S/N 7jcCPzX1jkKgulw3IjdCfw For Interim Liquidator : Lee Shih (Charmaine Choong with him) Tetuan Lim Chee Wee Partnership Cases Referred to: ➢ Re Demaglass Holdings Ltd (92001) BCLC 63 Legislation Referred to : ➢ Section 465 (1)(e) of the Companies Act 2016 ➢ Section 466 (1)(c) of the Companies Act 2016 ➢ Section 469 (1)(b) of the Companies Act 2016 ➢ Rule 32 of the Companies (Winding-Up) Rules 1972 Hearing Date : 10.01.2023 Decision Date : 10.01.2023 S/N 7jcCPzX1jkKgulw3IjdCfw
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