Econpile (M) Sdn Bhd v 1. ) Asm Development (Kl) Sdn Bhd (WA-28JM-32-12/2024)

ASM DEVELOPMENT (KL) SDN BHD (Company No.: 204867-W)

MUHAMMAD FIRDAUS BIN HASHIM (NRIC No.: 870214-08-5337) ... RESPONDENTS GROUNDS OF JUDGMENT

This is an unusual case.

It is where a creditor (and not the debtor company) who has applied for the appointment of a Judicial Manager (“JM”) over the debtor company (“ASM”) under s. 405 of the Companies Act 2016 (“CA 2016”). The applicant-creditor (“Econpile”) does not appear to be a typically friendly creditor who made the JM application to stave off other creditors in the hope of protecting the debtor company. The contest between the debtor company, ASM, and the creditor-applicant, Econpile, appears to be genuinely adversarial. It is rare as it truly tests the s. 405 regime if genuinely driven by a creditor. Indeed, it is a difficult task where a creditor may have to work against the company itself, which has all the powers to implement the plan.

The underlying originating application is an Originating Summons filed by the applicant on 9.12.2024 (Enclosure 1) (“Encl 1”) for the appointment of a JM under section 405(1) over the Respondent.

On 6.1.2025, Econpile also filed a Motion against ASM in Enclosure 11 (Encl 11) under s. 405(5)(b) and/or the inherent jurisdiction of Court for the appointment of an interim judicial manager (“IJM”) over ASM pending the disposal of Encl 1.

On 21.7.2025, I granted Encl 11. On 24.7.2025, ASM appealed. These Grounds deal with the appeal from my decision on Encl 11.

The cause papers comprise: a. Originating Summons dated 09.12.2024 - Encl 1; b. Affidavit in Support affirmed by Ng Heng Heem on 09.12.2024 - Encls 2 and 3; c. Supplemental Affidavit affirmed by Ng Heng Heem on 09.12.2024 - Encl 6; d. Notice of Application for the appointment of the IJM dated 06.01.2025 in - Encl 11; e. Affidavit in Support affirmed by Ng Heng Heem on 06.01.2025 - Encls 13 and 14; f. Affidavit in Reply of ASM affirmed by nor Mohd Amin bin Shaharudin on 15.01.2025 - Encls 16, 17 and 18; g. Affidavit in Reply [2] of ASM affirmed by nor Mohd Amin bin Shaharudin on 15.01.2025 - Encl 19; h. Affidavit in Reply of ASM affirmed by nor Mohd Amin bin Shaharudin on 05.02.2025 - Encl 20; i. Affidavit in Reply affirmed by Ng Heng Heem on 19.02.2025 - Encl 25.

Save where the context otherwise provides, all references to sections are with reference to CA 2016.

The contents of these Grounds are set out in the table below: Contents Para No INTRODUCTION 1-8 Background Facts 9-12 Public Auction 13-15 ASM’s Judicial Management Application 16-20 ASM’s Creditor Lists & Discrepancies 21-23 ASM Creditor List No. 1 24 ASM Creditor List No. 2 25 ASM Creditor List No. 3 26 Reclassification 27-30 THE CONTEST 31 Encl 11 - Econpile’s IJM Application 32 The Preliminary Objection & Urgency 33-35 The Basis for the IJM 36-40 S. 404 Pre-conditions 41-43 Inability to Pay Debts 44-47 Probability of Rehabilitation 48-52 The Evidence of Rehabilitation 53-57 The Preliminary Proposals Are Allegedly Unreliable 58-64 S. 405(5) - The Caretaker IJM 65-67 IJM Introductory Facts 68-73 Prima Facie Case for the Appointment of a s. 405(5) ‘Caretaker’ IJM 74-90 Misapplication & Assets in Jeopardy 91-97 ASM’s Financial Disclosure 98-99 Financial Irregularities 100-110 Preferential Treatment of Creditors 111 Summary 112-114 Econpile’s Encl 11 & Alleged Mala Fides 115-118 CONCLUSION 119-126

ASM has only 1 shareholder, Maju Holdings Sdn. Bhd. In turn, Tan Sri Abu Sahid bin Mohamed (“Abu Sahid”) was a director and shareholder of Maju Holdings, see Encl 13, para 16.

By a Letter of Award (“LOA”) dated 26.09.2016, ASM appointed Econpile as its main contractor to carry out works in a mixed development of 7 Blocks of Apartments for a contract sum of RM280 million (‘Project’). Econpile obtained various judgments and orders against ASM under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”), see Encl 2 paras 8 to 10: a. High Court Enforcement Order dated 29.11.2019 enforcing the Adjudication Decisions dated 21.06.2019 and 07.08.2019 as a High Court Order ("CIPAA Order 1"), whereby ASM was ordered to pay Econpile RM60,121,193.70 with interest and costs1. b. High Court Enforcement Order dated 28.10.2020 enforcing the Adjudication Decision dated 17.09.2019 as a High Court Order ("CIPAA Order 2"), whereby ASM was ordered to pay Econpile RM6,039,324.99 with interest and costs2.

Both CIPAA Orders 1 and 2 are unsatisfied. It is not disputed that Econpile is an unsecured judgment creditor of ASM.

Econpile initiated execution proceedings against ASM to enforce these CIPAA orders, which included: a. Garnishee Proceedings and a Judgment Debtor Summons, which have been concluded;3 b. a Writ of Seizure and Sale against ASM's land held under Title 51515, Lot No. 20003, Section 92A, Mukim Kuala Lumpur, Federal Territory of Kuala Lumpur, Kuala Lumpur (“the Land”) to enforce CIPAA 1 through WA-36-5- 01/2020 (“WSS 1”); 1 Encl 2, Exhibit NHH-2. 2 Encl 2, Exhibit NHH-3. 3 Encl 2, Exhibit NHH-4. c. a separate Writ of Seizure and Sale against the Land to enforce the CIPAA Order 2 through WA-36-16-06/20224 (“WSS-2”).

The date for the public auction for WSS-1 was fixed on 24.05.2021 with a reserve price of RM250,000,000.005. (“1st Auction Date”). The 1st Auction Date was vacated by Court and a new date fixed on 5.07.2022 (“2nd Auction Date”).

On 9.10.2023, Econpile filed a Notice of Application to fix the date for the Public Auction for WSS-1.6 However, this application could not proceed due to the Winding Up Petition filed by VLA Architects Sdn Bhd (formerly known as L2CA Architects Sdn Bhd) (“the VLA Petition”) demanding RM8,364,566.21 against ASM allegedly due as at 31.12.2022.

The Public Auction in WSS-2 was fixed on 6.12.2023 at a reserve price of RM250,000,000.007. However, the auction was not successful as there were no bidders. ASM’s Judicial Management Application 4 Encl 2, Exhibit NHH-10. 5 Encl 2, Exhibit NHH-5. 6 Encl 2, Exhibit NHH-9. 7 Encl 2, Exhibit NHH-3.

On the day before the Public Auction (5.12.2023), ASM filed an application that it be placed under judicial management vide KL HC, OS No. WA-28JM-37-12/20238 ("ASM’s JMA").

In response, Econpile filed 2 applications dated 15.12.2023 in ASM’s JMA9, for: a. leave to intervene in ASM’s JMA; and b. leave to continue Execution Proceedings over the Land:

to extend the relevant prohibitory orders previously granted over the Land;

(ii) to file an application to set a new date for the Public Auction.

On 30.01.2024, the Court granted an order for Econpile to: a. intervene in ASM’s JMA10; b. apply to extend the relevant prohibitory orders previously granted over the Land, and c. apply to set a new date for the Public Auction.

In Execution Proceedings No: WA-36-16-06/2022, Econpile filed applications on 30.01.2024 and 26.03.2024, to set a new date for the Public Auction after 30.06.2024 and to fix a fresh reserve price for the Land, respectively. The Public Auction was held on 24.07.2024 at the reserve price of 8 Encl 2, Exhibit NHH-14. 9 Encl 2, Exhibit NHH-15. 10 Encl 2, Exhibit NHH-16. RM225,000,000.00 (“2nd Auction”). Again, it failed for want of bidders.

On 29.07.2024, Econpile applied in Execution No: WA-36-16- 06/2022 to fix a new date for the Public Auction, and to set a new reserve price. Both were fixed on 21.10.202411.

What transpired in ASM’s JMA is important. It really does show what ASM and its management are capable of.

It concerns a series of Lists prepared by ASM of its creditors with particulars of their debts (although unsubstantiated). These Lists are riddled with unexplained inconsistencies and discrepancies. These discrepancies have been helpfully and succinctly summarised by Econpile in Encl 111 at paras 1 to 14. Encl 111 remains unrebutted.

There are 3 Lists.

The first was a List of ASM’s Debts as at 31.10.2023 (Creditor List No. 1) (introduced in Encl 13, Exhibit NHH-2 and also Encl 2, para 35) whereby ASM’s total debts were stated to be 11 Encl 2, Exhibit NHH-20. RM327,524,571.85. Amongst others, the List included debts said to be owed to: a. to Abu Sahid of RM137,399,876.56, by way of ‘advances’; b. to Econpile of RM86,351,038.12 for construction works.

An amended List of Debts (Creditor List No. 2) (introduced in Encl 13, Exhibit NHH-4), showing ASM’s total debts to be RM596,408,712.66 (also Encl 2, para 36). This new List now involves: a. recognising the increase of the debt to Abu Sahid from RM137,399,876.56 to RM147,113,422.96, see Encl 111, para 7; Encl 13, Exhibit NHH-4 pdf pp 234-236; b. increasing the debt to Abu Sahid by further recognising additional “interest on advances” by way of compound interest at 18% from 2014 to 2018 totalling RM237,877,235.18 (introduced in Encl 13, Ex. NHH-4). This increase is highly questionable. In ASM’s Annual Audited Financial Statements (“AFS”) for 2015 to 2018, the amounts due to directors were stated to be interest free (see Encl 111, para 5) and related companies only carried interest at 2% (Encl 111, para 4). No explanation was given for the alleged change in interest on these related party loans in particular, to Abu Sahid, (see Encl 13, para 19); c. decreasing the debt owed to Econpile from RM86,351,038.12 to RM64,900,000.00 (see Encl 111 at para 3). In oral submissions, Econpile claimed that this reduction was designed to eliminate Econpile’s veto right in the class of unrelated creditors. This submission was unsubstantiated and was made en passant. I thus gave it little or no weight.

A third list was filed in an affidavit affirmed 22.4.2024 (Creditor List No. 3) (introduced in Encl 14, Exhibit NHH-6), which now recorded a sum of RM235,254,022.01 as being due by way of related party transactions (see Encl 13, para 19).

Lastly, what is clear from ASM’s AFS for the year ended 31.12.2023 (see extract at para 40 of Encl 111), ASM reclassified its non-current liabilities owing to its holding and related parties to current liabilities. This caused ASM’s current liabilities to increase from RM200,545,836.00 to RM593,559,497.00 thus increasing its immediate debt burden to its related parties considerably.

These accounting discrepancies are arbitrary and ex facie, defy commercial justification. In response (at para 52 of Encl 41) they were flippantly dismissed by ASM as ‘irrelevant’.

I find them anything but. My conclusions are set out in paras 119 to 124 below.

ASM’s JMA was dismissed on 30.09.2024. I will not deal with subsequent proceedings for a stay of the Public Auction nor Econpile’s appeal on 4.11.2924, as they are not material to this appeal.

The real contest started when Econpile filed Encl 1. This time it was Econpile and not ASM that applied for the JM over ASM.

As stated in para 2 above, on 6.1.2025 Econpile also filed Encl 11 for the appointment of an IJM.

ASM, in effect, took a preliminary objection to Encl 11. The objection was that Econpile had not shown that the need for an appointment of an IJM was urgent. ASM relied on PNL Capital (supra) at paras 111 to 113. I regret that I cannot accept this reading of PNL Capital. In PNL Capital, urgency was not a necessary prerequisite to making an order for an IJM per se. There was a need to show urgency but this was only by reason that the application was made ex parte.

The Court of Appeal held: “[113] Whilst there is no prohibition in applying for an IJM order ex parte, there must be shown a real urgency for it. It was brought to our attention by learned counsel for the respondent that in Mansion Properties Sdn Bhd v Sham Chin Yen & Ors [2021] 1 MLJ 527 the IJM was granted ex parte. We note that the legislation is silent on the need for IJM applications to be made inter parte. The Companies (Corporate Rescue Mechanism) Rules 2018 and the High Court on several occasions recognised that an IJM order may be made on an ex parte basis. See the case of Re KS Energy Ltd and another [2020] SGHC 198. … [116] ... While the court need not have to come to a conclusion at this stage that he is the directing mind and shadow director of Fintree, there is prima facie evidence pointing in that direction such that the court should be wary of the urgent need to make an IJM order when in reality a collateral purpose in preventing the consent judgments being recorded, sealed and extracted was the trigger for such an ex parte application.”

In my judgment, urgency, by itself, is not strictly a pre-condition for the appointment of an IJM. However, urgency may well be a material consideration in the exercise of the general discretion whether to appoint an IJM. This, in my view, explains the dicta in Re Hodlnaut Pte Ltd (supra) at para 83.

The appointment of the IJM was moved under the statutory regime in ss 404 and 405. Plainly, the start of the analysis is the statutory provisions themselves.

They provide as follows. “Application to Court for a company to be placed under judicial management and for appointment of a judicial manager. 404 An application for an order that a company should be placed under a judicial management and for an appointment of a judicial manager may be made to the Court by the company or its creditor if the company or its creditor considers that:

the company is or will be unable to pay its debts; and

there is a reasonable probability of rehabilitating the company or of preserving all or part of its business as a going concern or that otherwise the interests of creditors would be better served than by resorting to a winding up. Power of Court to make a judicial management order and appoint a judicial manager 15 405 (1) Where a company or its directors, under a resolution of its members or the board of directors, or a creditor, including any contingent or prospective creditor or all or any of those parties, together or separately, makes an application under section 404, the Court may make a judicial management order in relation to the company if:

the Court is satisfied that the company is or will be unable to pay its debts; and

the Court considers that the making of the order would be likely to achieve one or more of the following purposes:

the survival of the company, or the whole or part of its undertaking as a going concern;

(ii) the approval under section 366 of a compromise or arrangement between the company and any such persons as are mentioned in that section;

(iii) a more advantageous realisation of the company's assets would be effected than on a winding up.”

I note that ss 405(1)(a) and (b) only allow for the appointment of a Judicial Manager proper and not for an IJM.

The actual appointment of an IJM is made under ss. 405(5)(a) or 405(5)(b), and in both cases, only pending the disposal of the JMA. They provide: “(5) Nothing in this section shall preclude a Court -

from making a judicial management order and appointing a judicial manager if the Court considers the public interest so requires; or

from appointing, after the making of an application for a judicial management order and on the application of the person applying for the judicial management order, an interim judicial manager, pending the making of a judicial management order, and such interim judicial manager may be the person nominated in the application and may exercise such functions, powers and duties as the Court may specify in the interim order.”

I also note that Econpile does not seek the appointment of the IJM under s. 405(a), the public interest ground. As such, for the purposes of Encl 11, I will confine myself to determining whether ss. 404 and 405(b) have been met.

There are jurisdictional hurdles that must first be satisfied before a s. 404 application is even filed. First, under s. 405(b), no application for an IJM may be made until ‘after the making of an application for a judicial management order’. As such, the preconditions to the very making of a JM application itself under section 404 must first be met before the application and appointment of an IJM under s. 405(b) may be made.

There are other pre-conditions in s. 404(a) and (b). There are 2: that the company or the creditor (either being the requisite applicant) ‘considers’ that: a. company is or will be unable to pay its debts - s. 404(a); and b. there is a reasonable probability of rehabilitating the company or of preserving all or part of its business as a going concern or that the interests of the creditors would be better served than in a winding up - 404(b). The threshold is low, requiring that the applicant need only ‘consider’ that these preconditions will be met, see Leadmont Development Sdn Bhd v Infra Segi Sdn Bhd and another suit [2019] 8 MLJ 473 at para 32.

However, there must be some basis or evidence for the applicant (Econpile) to arrive at the conclusion that it ‘considers’ that the pre-conditions in ss. 404(a) and (b) will be met. Mere bare statements are not enough, there must be real proof, see my comments in Novabrite Lighting Sdn Bhd v Emrail Sdn Bhd (Balaranee Construction, proposed intervener) [2024] MLJU 2986 at para 122. Otherwise and even though the threshold under s. 404 may be low, an order dispossessing management from the company would be too easily achieved by mere bare statements.

The first pre-condition - I have no doubt that that Econpile is correct when Counsel submits that it ‘considers’ that ASM is unable to pay its debts, see para 32 of Encl 32. The CIPAA Orders 1 and 2, which are the subject of Enforcement Orders (see para 8 above), have not been satisfied and remain outstanding. As such, Econpile may properly consider that ASM is ‘unable to pay its debts’ as they become due, within s. 405(1)(a). In this context, by s. 405(8), the definition in s. 466(1) of being ‘unable to pay its debts’, is applicable to s. 405.

The test is that of commercial insolvency, being the ability to pay its debts as they become due; irrespective of the value of ASM’s underlying assets, see Lafarge Concrete (M) Sdn Bhd v Gold Trend Builders Sdn Bhd [2012] 6 MLJ 817 at para 16.

Further, out of completeness, I also note that these CIPAA Orders 1 and 2 are undisputable for the purposes of winding up proceedings, see Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 4 MLJ 67 at paras 37 to 39. Indeed, it would be difficult to raise a genuine dispute on these debts as they are unpaid CIPAA debts subject to enforcement orders.

In my mind, the first pre-condition of s. 404 has been met.

The second pre-condition – Econpile also ‘considers’ that there is a reasonable probability that ASM may be rehabilitated under JM or of preserving all or part of its business as a going concern, see Econpile’s submissions in para 18 of Encl 44.

The basis of Econpile’s conclusions are derived from the proposals of the nominated IJM in Exhibit NHH-28 of Encl 6, and Exhibit NHH-8 of Encl 13 (the Preliminary Proposals”). In my judgment, the section does not require conclusive proof that rehabilitation will be achieved; the Preliminary Proposals are enough to satisfy the threshold test that Econpile merely needs to ‘consider’ that rehabilitation is a ‘reasonable probability’, see para 48 above.

I had a chance to consider the objectives of the JM regime in Maju-TH Sdn Bhd (Lembaga Tabung Haji, proposed intervener) [2025] 8 MLJ 875 at paras 69 to 74, in light of the more recent decisions on this point. I found that rehabilitation is one of the major objectives of judicial management and that the ‘survival of the company’ in s. 405(1)(b)(i) means the rehabilitation of the company.

The issue is perhaps put beyond doubt by the Court of Appeal in PNL Capital (supra) at para 54; with the exception that if revival is unachievable, a managed sale of the assets may be pursued to increase recovery for the creditors.

Again, in as far as the pre-condition in s. 404(b) is concerned, there must be some evidence or basis for Econpile to come to conclusion that it considers that there is a reasonable probability of rehabilitating the company or of preserving all or part of its business as a going concern. A mere allegation is not enough, see para 49 above.

Econpile has the support of the Nominated JM in his 2 preliminary reports (“the Preliminary Proposals”) in pp 8 to 156 Exhibit NHH-28 of Encl 612; and Nominated JM’s Second Proposal, Encl 13, at pp 198 to 204.

The conclusions of the Nominated JM in Exhibit NHH-28, Encl 6 are: a. the Debt Settlement Proposal will allow ASM to make full repayment of all its creditors, see at para 2.1(iii); b. the JM will rehabilitate ASM as a going concern and there will be a real effective possibility of rehabilitating ASM given the value of its unencumbered assets, see at paras 2.1(v) and (vi); c. the Debt Proposal will allow ASM to survive as a going concern and achieve a better return than in a winding up, see at paras 3 (i) to (iii) and Part D para 7.

In short and in the opinion of the Nominated JM, the Preliminary Proposals show that there is reasonable probability of rehabilitation of ASM within s 404(b).

While I accept that the final JM Report will be only be issued under section 420 after 60 days of making the JMO and for voting purposes under s. 421, a preliminary report of the proposed JM is also not formally due at the initial application under ss 404 and 405.

It would, however, be very useful to the Court if such a Preliminary Report is made available to the Court. In Novabrite Lighting (supra) at para 50, I agreed with the approach in Re Biaxis (M) Sdn Bhd [2022] 7 MLJ 443 (at paras 14 and 15) and that in Federal Power Sdn Bhd v Dara Consultant Sdn Bhd [2022] 7 MLJ 563 at paras 23 and 24, that a preliminary report by the Nominated JM (although not formally required) would provide an objective and professional view that would be extremely useful in a case such as this, where the issue whether section 405(1)(b)(2) is live, i.e., whether the JMO will likely achieve the survival of the company.

Be that as it may, the first objection was that the Preliminary Proposals are made in bad faith and Encl 11 should have been dismissed for being proposed for collateral purposes, as was the application in PNL Capital (supra). I find this allegation of mala fides and collateral purposes wholly unconvincing, see paras 116 to 119 below.

Secondly, ASM further submitted that the Preliminary Proposals are unrealistic and wholly inadequate12, in that: a. Econpile’s Nominated JM has failed to provide any evidence that by placing ASM under an IJM, it will allow the proposed IJM to dispose Maju Triangle for a better value than a liquidator in a winding. Nor will it secure a joint venture partner for the completion of Maju KL Development. It is said that any potential purchaser or joint venture partner for Maju KL should have been disclosed in the Preliminary Proposals; b. no liquidation analysis was shown to the effect that the IJM would provide a better return to ASM’s creditors than in a winding up; c. no details of the proposed sale (and timelines) for Maju Triangle and/or the joint venture structure and plan for Maju KL were given; d. no details were given as to ASM’s debtors and the collection of such debts. 12 Para 8.2, p 17, Enc 19.

I will deal with these complaints collectively. It seems to me that these complaints of the Preliminary Proposals require the Nominated JM to possess an intimate knowledge of the financial position of ASM. a. First, no creditor, without more, will have such information or access to the same. b. Secondly, it is only on being appointed, that the IJM will have unrestricted access to the accounting and other records of ASM. Until then, such information would be protected by confidentiality and access to an outsider 3rd party creditor would be impermissible. c. I note Nadzarin Wok Nordin J’s (as he then was) finding in Federal Power v Dara Consultant (supra) at para 23, that that the actual recovery plan could only be prepared after the JM’s appointment under s. 420; and the plan would only be tabled for voting thereafter. I accept that it was not feasible for the Nominated JM to make any definitive proposal without being officially appointed. d. I would imagine that the Nominated JM could only have ascertained the financial position of ASM and prepared the Preliminary Proposals provisionally and perhaps even superficially. And that too, based on publicly available information; this was indeed the case, see the Nominated JM’s statement at para 2.1 Part C of the Preliminary Proposal at Exhibit NHH-28 of Encl 6. e. It is obvious to me that the Preliminary Proposals could not have been definitive at this stage given the need for further financial information. For example, whether the total debts of ASM are truly RM596,408,712.66 or indeed RM327,524,571.85 as per the different Creditors Lists (see paras 21 and 22 above), will significantly affect any rehabilitation proposal.

Whilst in an ideal world, a definitive IJM’s proposal would be welcome at this stage, it would be naïve to think it possible. Fortunately, the wisdom of Parliament reflected by s. 404(b), only requires the applicant to "consider" that one of the outcomes in s. 404(b), such as rehabilitation, is reasonably probable.

Quite simply, it is wrong for ASM to contend that at this early stage of a creditor driven restructuring, that the Preliminary Proposals require the detailed and in-depth analysis currently insisted upon by ASM. And ASM must accept that in the eyes of the creditors, the appointment of an independent IJM is necessary to verify ASM’s financial position to determine whether ASM is able to continue as a going concern.

In summary, Encl 11 was filed by Econpile (which it is perfectly entiled to do under s. 405). But it is difficult to imagine how a Nominated JM on perceivably hostile terms with ASM could possibly prepare at this early stage, a meaningful proposal with little or no access to the in-depth financial and accounting records of ASM. For ASM to insist on a complete proposal at this stage just lacks credibility.

As such, I rejected ASM’s submission that the Preliminary Proposals are so inadequate that Encl 11 must be dismissed in limine.

There are pre-conditions to the appointment of an IJM under s. 405(5).

First, s. 405 provides that an application under section 404 must first be made.

Secondly and as discussed below, a prima facie case that an appointment of a JM under s. 405(1) will be made out and this means that that a prima facie case that s. 404 will also be met.

From para 94 of Encl 32 and Econpile’s submissions in Encl 4413, Econpile was clearly unhappy with management and the 13 See at paras 5, 7.2, 7.3, 8.3. way ASM was run. No doubt if justified, it would mean that Econpile would be correct that repayment of its debt of over RM66 million (see para 8 above) would be negatively affected.

Encl 11 pressed for management of ASM to be immediately placed in the hands of an independent and professional IJM, pending the hearing of the Encl 1.

In Deutsche Bank ag and anor v Asia Pulp & Paper Co Ltd [2003] 2 SLR(R) 320 at para 16, the Court of Appeal of Singapore lucidly explained the choices facing the Court on an application for an IJM: “[16] What is noteworthy about the present case is that while judicial management is usually a remedy sought by an insolvent company to stave off actions by creditors where there is still hope for the rehabilitation of the company, APP's creditors are the ones who are seeking a judicial management order while the company is trying to fend off the appointment of judicial managers. As such, the choice is not, as is usually the case, between judicial management and the winding-up of a company. Instead, the choice relates to whether independent judicial managers or the present management of APP should oversee the restructuring process.”

I whole heartedly accept this analysis and that notwithstanding technical legal issues, the true choice facing me, in practical terms, is whether to allow the operations of ASM to remain in the hands of the existing management. Or whether such operations should be placed in the hands of an independent professional pending Encl 1.

Obviously, this would entail an evaluation of the conduct and historical behaviour of management in running ASM. This was touched on in the Preliminary Proposals, which form the basis of the appointment of the IJM in Encl 11.

Unsurprisingly, ASM attacked the Preliminary Proposals broadside. Prima Facie Case for the Appointment of a s 405(5) ‘Caretaker’ IJM

As a start to the analysis, in all the cases for the appointment of an interim caretaker, by whatever name called, a prima facie case for the final appointment must be shown. It is a universal test. There are several examples worth considering.

The first is the provisional (now interim) liquidator. The power to appoint an interim liquidator is a draconian power seen as a serious intrusion into the company, see Re Forrester & Lanego Ltd. [1977] 2 BCLC 155 at 158, the power being referred to as to the ‘nuclear weapon of the Companies Court’, see Re a Company (No. 007070 of 1996) [1997] 2 BCLC 139 at 142, commonly seen as a weapon of last resort.

As a pre-condition, the winding up petition must disclose a good ground for winding up, see McLennon Holdings Pty Ltd.

1 ACLC 786. Similarly, in Kok Fook Sang v Juta Villa (M) Sdn Bhd & Ors [1996] 2 MLJ 666; Emporium Jaya (Bentong) Sdn Bhd (in liquidation) v Emporium Jaya (Jerantut) Sdn Bhd [2002] 1 MLJ 182, it was held that there must be a strong prima facie case that the company will be wound up and obviously, a final liquidator appointed.

Similarly, in the case of interim receivers in administrators, Vinelott J’s reasoning In Re a Company (No 00175 of 1987) [1987] 3 BCC 12 was approved in Re KS Energy Ltd and another matter [2020] 5 SLR 1435 thus: “[14] It is clear from Vinelott J’s reasoning that an order for IJM would be appropriate where there is a prima facie case for the making of a judicial management order.”

In the case of an interim Court appointed receiver, again, a prima facie case for the final remedy (such a winding up order or an administration order) must also be made out before an interim appointment of the caretaker receiver intruding into the company’s management’s powers will be ordered, see Lee Quan Yoong [As Executor and Trustee of the Estate of the late Koh Peng Guan] v. Koh Heng Jin Holdings Sdn. Bhd. & 2 Ors [2022] 1 LNS 870, per Puan Adlin Abdul Majid, at para 15.

Of immediate significance is the appointment of an IJM. S. 405(5) expressly provides for an interim appointment under ss 405(5)(a) or (b). As stated above, Econpile does not rely on the ‘public interest’ in s. 405(5)(a).

It only relies on s. 405(5)(b) which provides for the appointment of an IJM pending disposal of the appointment of the JM under s. 405(1), under Encl 1: “(5) Nothing in this section shall preclude a Court- …

from appointing, after the making of an application for a judicial management order and on the application of the person applying for the judicial management order, an interim judicial manager, pending the making of a judicial management order, and such interim judicial manager may be the person nominated in the application and may exercise such functions, powers and duties as the Court may specify in the interim order.”

There is no express guidance in s. 405(5) nor in the Companies (Corporate Rescue Mechanism) Rules 2018 as to the precise circumstances and protocols pursuant to which an IJM will be ordered.

In Singapore, the Court of Appeal in Hin Leong Trading (Pte) Ltd (In Liquidation) v Rajah & Tann Singapore Llp and another appeal [2022] SGCA 28 at para 18, set the test following Vinelott J in Re a Company (No 00175 of 1987) (supra). The Court of Appeal said: “For example, in Re a Company (No 00175 of 1987) [1987] 3 BCC 124, Vinelott J observed, in relation to the making of an interim order for administration (on which the judicial management regime was based), an order for interim relief would be appropriate where there is a prima facie case for the making of an order for administration and where the assets or businesses of the company are in jeopardy”.

A similar position taken by Aedit Abdullah J in Re KS Energy (supra) at para 14 and again in Re Hodlnaut Pte Ltd [2023] 4 SLR 862, where he held: “[5] The criteria and rationale for the making of an order for IJM were considered in Re KS Energy Ltd and another matter [2020] 5 SLR 1435 at [14] and [15]: there must be a prima facie case for the making of a full judicial management order, though not all criteria for the grant of a full order need to be met; and usually there must be some danger to the assets of the company. Some sort of urgency or exigency must be shown.”

These cases suggest, and I agree, that there are 2 basic requirements. The first is that (as discussed above), a prima facie case must be shown for the appointment of a full JM under s. 405(1). Secondly, there must be cogent evidence that the assets of ASM are in jeopardy (whether under threat of misapplication or otherwise) and require protection.

In Re KS Energy Ltd (supra), Aedit Abdullah J in deciding whether to appoint an IJM under the Singapore legislation similar to our s. 405, held at paras 14 and 15 that for an order for an IJM to be made, a prima facie case for the appointment of a full JM under s. 405(1) must first be shown. And that there must be evidence of some danger to the assets of the company.

The need for a prima facie case is easy to appreciate. It is the underlying fabric of company law that the power to manage a company is vested in the directors to the exclusion of other stakeholders. This management structure is fundamental and is ordinarily enshrined in the company’s Constitution. The option to oust management cannot be taken lightly and the preservation of the directors’ power of management is not mere eye-wash. The need for a prima facie case before ousting management is consistent with the tenets of company law. And the need for a prima facie case before the appointment of a JM or any other caretaker, must necessarily be strict. Otherwise, the directors of a company vested with the rights of management, may be ousted with undue ease even where the case for a caretaker is weak.

I also note that the making of an IJM under s. 405(5)(b) is only pending the appointment of a JM under section 405(1). It must follow that if there is no case for the appointment of a full JM or the case for a full JM is unduly weak, there cannot be any justification for an interim IJM pending the hearing of the JMA.

In this case, a prima facie case for the appointment of a full JM is indeed compelling. The pre-conditions are: a. first, by s. 405(1) there is an application under section 404, see (Encl 1); b. secondly, the object of the application under s. 404 is for an order for a JM to be made under s. 405 if (as material):

the Court is satisfied that the company is or will be unable to pay its debts; and

the Court considers that the making of the order would be likely to achieve one or more of the following purposes:

the survival of the company, or the whole or part of its undertaking as a going concern; …

(ii) a more advantageous realisation of the company's assets would be effected than on a winding up.”

A prima facie case has been shown: a. ASM is unable to pay its debts within s. 405(a), see paras 44 to 46 above; b. the JM will likely to achieve 405(b), being the survival of ASM or its undertaking as a going concern. Econpile relies on the Preliminary Proposals of the nominated JM to show this, see para 54 to 57 above. This is perfectly acceptable, see Re Biaxis (M) Sdn Bhd (supra) at paras 12 to 14.

In my mind, there is sufficient evidence to show that both conditions have been satisfied.

The process to have the JMA heard will inevitably take time. This delay could leave the assets of the company exposed to misapplication. In my judgment, protection is afforded by an IJM under s. 405(5). Instinct suggests that it should be done quickly. As was recognised by the Singapore Court of Appeal in Hing Leong Trading (supra) at para 18, there will be ‘management limbo’ pending the hearing of the application, whereby there may be attendant risks to the assets. There may well be a need for an immediate appointment of the IJM. But obviously, there must be cogent evidence that the assets of ASM are in jeopardy and require protection, see paras 63 and 99 herein.

These interim protective appointments are not uncommon. Typically, such appointments are made to protect the assets of the company pending a further application. A few examples need be cited.

The first is the appointment of an interim liquidator under section 476 and rule 35 of the Companies (Winding-Up) Rules

The appointment must be imperative and there must be real evidence to show danger to the assets. In Ga Yee Furniture Sdn Bhd & Ors v Dato’ Khor Wooi Chen [2020] 12 MLJ 325, it was held that there must be compelling evidence showing misappropriation and/or mismanagement of company funds; the assets of the company were in jeopardy and the appointment of an interim liquidator was necessary to preserve and protect the assets of the company from being further dissipated pending the hearing and disposal of the winding up proceedings.

In the case of a Court appointed Receiver where the assets of a company are in jeopardy or there was mismanagement, see Lee Quan Yoong (supra) at para 15 and Matang Holdings Bhd. v Dato Lee San Choon [1985] 2 MLJ 406.

Thirdly, in the case of administrations in England, an interim receiver may be appointed in an administration to protect the assets of the company, see In Re a Company (No 00175 of 1987) (supra).

Lastly, and as is most relevant, is the case of an IJM. In KS Energy (supra) Aedit Abdullah J in deciding the appointment of an IJM under similar Singapore legislation, held that an order for an IJM may be made where the assets of the company are in jeopardy; but of course, if it first shown that there is a prima facie case for making a JM order. He said: “[14] It is clear from Vinelott J’s reasoning that an order for IJM would be appropriate where there is a prima facie case for the making of a judicial management order, and where the assets or businesses of the company are in jeopardy. That said, it is not a prerequisite to the grant of an order for IJM that all the criteria for the granting of a judicial management order are satisfied: In Re Switch Services Ltd (In Administration) [2012] Bus LR D91 at 95. … [16] Rather, reference should be had to the raison d’être of interim relief in the context of judicial management. The protection of the assets and business of a company are the central consideration, and the court’s determination of whether or not an order for IJM should be ordered will depend at least in part on the nature and imminence of the risks facing the company’s business and assets.”

This requirement to protect the assets of the company and the risk to such assets, has now been confirmed by the Court of Appeal in Singapore in Hin Leong Trading (supra) and again by Aedit Abdullah J in Re Hodlnaut Pte Ltd (supra), as a prerequisite to the appointment of an IJM. Obviously, there must be cogent proof of assets being in jeopardy, see Re Hodlnaut Pte Ltd (supra) at para 5.

The information disclosed in ASM’s JM says a lot. Although ASM’s JM failed, the manipulation of the financial information (see paras 21 to 28 above) shows serious financial irregularities. These were statements filed in Court as a basis for a JM. They appeared to be manipulated to obtain Court protection and if false, as I suspect they may well have been, they were designed to mislead the Court. In my mind, such financial irregularities are a blatant abuse and constitutes sufficient proof to require the appointment of an IJM14. Econpile also complains that there are: a. questionable discrepancies in ASM's financial statements; b. ASM’s proposal in ASM’s JMA of differential payment priorities and/or special treatment for certain creditors in the ASM’s JMA; c. ineffective management of ASM; d. ASM owns substantial property in the form of Maju KL. It has been abandoned, with little or no action taken to revive the development. I agree that a plan should be explored to revive the Maju KL development, which again could be undertaken by the IJM; e. ongoing litigation against ASM which has to been properly managed.

In my mind, I do not need to deal with all these grounds. I am satisfied that the financial irregularities and mismanagement alone are sufficiently eggregious to justify the appointment of an IJM. I will repeat them again. 14 Encls 13 and 14, para 14

In ASM’s AFS dated 30.09.202 for the year ended 31.12.2023, ASM’s current liabilities are recorded as RM193,306,070.00 and RM200,545,836.00 for the years 2021 and 2022 respectively. However, ASM’s current liabilities for the year 2023 increased exponentially to RM593,559,497.00, as below. Year Current Liabilities Current Assets 2021 RM 193,306,070.00 RM 603,347,152.00 2022 RM 200,545,836.00 RM 611,193,578.00 2023 RM 593,559,497.00

ASM’s AFS for the year ended 31.12.2023 also reveal significant discrepancies in its records when compared to the reports from previous years.

It also appears that ASM has reclassified debts owed to its parent and related companies from non-current liabilities to current liabilities between 2022 and 2023 (see para 27 above). This resulted in an increase in current liabilities from RM200,545,836.00 to RM593,559,497.00 in 2023.

As per their Lists of Creditors (ASM’s Creditor List No.1), ASM’s total outstanding debt was stated to be RM327,524,571.85, which was later amended (ASM’s Creditor List No.2) to RM596,408,712.66 with additional "interest on advances" amounting to RM237,877,235.18 in favour of Abu Sahid.

However, no interest-bearing borrowings are recorded in favour of directors in ASM's AFS for 2014 to 2018 (see Encl 111 at para 5). There must be a real doubt as to whether such interest recorded in 2023 is genuine15.

It is noted that these current liabilities are owed to a related party and the ultimate shareholder of ASM, Abu Sahid, see para 9 above. Such large related party transactions are always suspicious, particularly when they are not explained when questioned, as in this case. Indeed, on the face of ASM’S AFS for 2023, this would mean that such interest would have to be repaid to Abu Sahid as part of any rehabilitation plan. This would constitute a considerable windfall on Abu Sahid, particularly if there is no basis for the for the interest claimed and if none were due.

In my judgment, these accounting discrepancies cast serious doubt on the honesty of ASM’s directors and management in the preparation of ASM’s AFS. Unjustifiably inflating the debts of related parties would be a precursor to unjustified payments to them as part of the rehabilitation plan and thereby, a misapplication of the assets of ASM. 15 See Encls 13 and 14, para 18.

The increase in current liabilities needs to be scrupulously verified and determined by an independent professional. What is important is that the difference of RM237,877,235.18 in alleged current liabilities will certainly and significantly affect any rehabilitation or revival plan for ASM, particularly in light of possible financial mismanagement. In this case, the verification should fairly be done by the IJM. I do not accept that this is beyond the remit of an IJM as is claimed by ASM. Such verification is simply part of the rehabilitation that the IJM is tasked with.

On the contrary, the IJM should be allowed access to ASM's accounting and financial records to verify the authenticity of ASM’s debts to determine ASM’s actual liabilities. Only then could a viable and definitive plan for ASM's rehabilitation be proposed.

This process is crucial, and cannot be effectively carried out without the appointment of an independent professional. Ordinarily, JMAs are moved by the distressed company itself, but in this case, it has been made by a creditor, who does not have direct access to the company's financial records or information. Therefore, the appointment of an IJM is necessary to ensure a fair and transparent assessment.

It is obvious that Econpile is unable to give an accurate picture of ASM’s financial position beyond the information contained in the publicly available AFS. As stated above, such information is insufficient to formulate a reliable rehabilitation plan.

What makes matters more questionable is that ASM in ASM’s JMA, has classified its creditors into 2 categories: Class A and Class B creditors. ASM offered preferential treatment to Class A creditors, promising payment in full, while Class B creditors were required to waive 58% of their debt. There was no commercial or rational explanation for this proposal. Again, this says a lot.

Given the financial discrepancies, I am not surprised that Econpile is worried that the financial affairs and assets of ASM should not remain in the hands of management who appear to be acting to benefit related parties at the expense of the general body of creditors, see paras 39 and 50 of Encl 32 and para 106 above.

In particular, the increase of related party debts to Abu Sahid from RM137,399,876.56 to RM147,113,522.96. and an addition of RM237,877,235.18 being interest on advances without apparent justification is difficult to accept.16 16 Encls 13 and 14), Exhibit NHH-4

The appointment of an IJM is therefore needed under Encl 11 to address the imminent risk of deterioration and misapplication of assets. Econpile’s Encl 11 & Alleged Mala Fides

I should deal with an objection taken by ASM. I accept that an application for the appointment of an IJM cannot be used for collateral purposes. But I do not accept ASM’s submission that Encl 11 was filed mala fide for the collateral purpose of advancing Econpile’s own personal interest, as was the case in PNL Capital (supra) at para 54.

Here, ASM alleges just that (see ASM’s primary submissions at para 4.1, 4.2, 17.4 and 22 of Encl 33) which claims that Encl 11 was engineered to push through the Public Auction for the benefit of Econpile. As indicated below, ASM and the other creditors will not be prejudiced by the Public Auction as the proceeds of the Public Auction will be paid to the creditors pari passu. I will not allow such proceeds to be paid to Econpile in priority to the other creditors. And certainly a proper Proof of Debt exercise must be carried out to ascertain and verify the debts of all ASM’s creditors.

In contrast, there is enough evidence to suggest that there has been financial misconduct in the preparation of the AFS and in the manipulation of the debts of the ASM’s related parties and in particular the creation of the increased debts of Abu Sahid; the increase of such debts would allow a greater repayment to Abu Sahid ahead of the other creditors of ASM in any rehabilitation.

In the face of such evidence, the allegation of mala fides to proceed with the auction of Maju Triangle for the proceeds to be applied towards repayment of Econpile in priority to the other creditors appear to be artificially generated to distract an objective observer from the real complaint of financial misconduct by ASM.

By way of summary, there appears to be serious financial irregularities and discrepancies of sufficient gravity to warrant the appointment of an IJM. For completeness, I also refer to, in particular, Encl 111; paras 11–21 of Encl 13 and paras 37– 57 of Econpile’s Submission at Encl 32.

I am particularly swayed by the main allegations that remain unanswered, if I may be forgiven for repeating myself, in that: a. ASM’s financial and accounting records resulting in a large increase of ASM’s current liabilities in favour of the related partis, in particular, Abu Sahid; b. in the amended List of Creditors No 2, there is an increase of the debt of RM9,713,646.40 allegedly due to Abu Sahid, a shareholder of Maju Holdings, ASM’s sole shareholder. No explanation of this increase was given in the AFS; c. the “interest on advance” on amounts due to Abu Sahid amounting to a staggering RM237,877.235.18, whilst no such interest on advances in favour of directors was recorded in ASM’s AFS for 2014 to 2018, see para 5 of Encl 111; d. the unfair classification of its creditors in ASM’s JM whereby 1 class will be paid in full, and the other is required to waive 58% of its debts with no commercial justification. On the face of the ASM’s JM Proposal, it does seem that management is preferring the interests of certain other creditors for no justifiable reason. Even though ASM’s JM Proposal was dismissed, such treatment does show the mind set of management.

On these grounds alone, there is sufficient evidence to show accounting misconduct for the purposes of increasing the claims of ASM’s related parties against ASM, in particular, Abu Sahid.

Such conduct also shows ASM’s improper and even possibly dishonest management of its financial affairs. Clearly, there is a need for forensic auditing by an independent professional to verify the financial position and debts of ASM to its creditors, and its related parties, in particular, Abu Sahid.

This may be done by the IJM on a preliminary basis, as was suggested in Biaxis (supra) at paras 13 and 14 and as adopted by me in Novabrite (supra) at para 54. Without this exercise, it is simply not possible to properly formulate a concrete Proposal to rehabilitate ASM, if that is at all possible. The IJM would also be able to maintain status quo pending disposal of Encl 1.

In short, the real question facing me on Encl 11 is whether, on the evidence, the operations of ASM should remain in the hands of the existing management, or be placed in the hands of an independent professional IJM, see the analysis in paras 70 to 72 above. In my judgment, the evidence clearly suggests (particularly in view of the financial irregularities favouring the related parties) that the existing management should not be allowed to continue with the operations of ASM.

I am acutely aware that the appointment of an IJM, perhaps not quite a ‘nuclear weapon’ of last resort as a provisional liquidator may be, the evidence made it clear that the Court had to intervene.

Accordingly, I had no hesitation in granting prayer 1 of Encl 11 appointing the IJM, with costs of RM20,000.00 against the First Respondent and RM10,000.00 against the 2nd Respondent, both awards being subject to allocatur. Dated the 9th day of September 2025 ........................tt............................ YA TUAN SAHERAN SUHENDRAN JUDICIAL COMMISIONER OF THE HIGH COURT (COMMERCIAL 11) (INSOLVENCY 2) OF KUALA LUMPUR IN THE TERRITORY, MALAYSIA Counsel for the Applicant: Solicitors: Dato Arthur Wang Ming Way, Vicky Ong, Siow Yoong Kei Messrs. Arthur Wang, Lian & Associates (Kuala Lumpur) Counsel for the First Respondent: Solicitors: Dato Jasbeer Singh, Nakeeran Kumar Kanthavel & Nur Najihah (Pupil-in-Chambers) Messrs. Jasbeer Nur & Lee (Kuala Lumpur) Case References: • Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 4 MLJ 67 • Deutsche Bank ag and anor v Asia Pulp & Paper Co Ltd [2003] 2 SLR(R) 320 • Emporium Jaya (Bentong) Sdn Bhd (in liquidation) v Emporium Jaya (Jerantut) Sdn Bhd [2002] 1 MLJ 182 • Federal Power Sdn Bhd v Dara Consultant Sdn Bhd [2022] 7 MLJ 563 • Ga Yee Furniture Sdn Bhd & Ors v Dato’ Khor Wooi Chen [2020] 12 MLJ 325 • Hin Leong Trading (Pte) Ltd (In Liquidation) v Rajah & Tann Singapore Llp and another appeal [2022] SGCA 28 • Kok Fook Sang v Juta Villa (M) Sdn Bhd & Ors [1996] 2 MLJ 666 • Lafarge Concrete (M) Sdn Bhd v Gold Trend Builders Sdn Bhd [2012] 6 MLJ 817 • Leadmont Development Sdn Bhd v Infra Segi Sdn Bhd and another suit [2019] 8 MLJ 473 • Lee Quan Yoong [As Executor and Trustee of the Estate of the late Koh Peng Guan] v. Koh Heng Jin Holdings Sdn. Bhd. & 2 Ors [2022] 1 LNS 870 • Maju-TH Sdn Bhd (Lembaga Tabung Haji, proposed intervener) [2025] 8 MLJ 875 • Matang Holdings Bhd. v Dato Lee San Choon [1985] 2 MLJ 406. • McLennon Holdings Pty Ltd. (1983) 1 ACLC 786 • Novabrite Lighting Sdn Bhd v Emrail Sdn Bhd (Balaranee Construction, proposed intervener) [2024] MLJU 2986 • Re a Company (No 00175 of 1987) [1987] 3 BCC 12 • Re a Company (No. 007070 of 1996) [1997] 2 BCLC 139 • Re Biaxis (M) Sdn Bhd [2022] 7 MLJ 443 Counsel for the Second Respondent: Solicitors Nai Mei Kei Messrs. Y.Y. Ho & Lee (Kuala Lumpur) • Re Forrester & Lanego Ltd. [1977] 2 BCLC 155 • Re Hodlnaut Pte Ltd [2023] 4 SLR 862 • Re KS Energy Ltd and another matter [2020] 5 SLR 1435 Legislation References: • Companies (Corporate Rescue Mechanism) Rules 2018 • Companies (Winding-Up) Rules 1972 • Companies Act 2016 • Construction Industry Payment and Adjudication Act 2012 Decision Date: 21st July 2025