KL PETROGAS SDN BHD v SA Puncak Management Sdn Bhd (WA-24NCC(SOA)-14-07/2025)

These Grounds concern an Originating Summons (Encl 1) filed for convening and restraining orders pursuant to ss 366 and 368 of the Companies Act 2016 (“CA 2016”).

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

The Contents of these Grounds are as set out in the table below: Contents Para No INTRODUCTION 4-6 The Conventional Scheme under s. & the Statutory Veto 7- 11 S/N brjYoqGaAk6eYedupCP1yQ BACKGROUND FACTS 12-14 The SA Facilities 15-18 Termination of the Kasawari Sub-Contract 19-23 SUIT 787 BY KL PETROGAS (ILLEGALITY OF THE SA FACILITIES) 24-26 Suit 787 & the Interlocutory Orders 27-28 SA Puncak’s Counter Claim in Suit 787 29 O.14A to Dispose Both The Illegality Claim & the SA 787 Counterclaim 30-34 The Results of the O14A in Suit 787 35-39 SA Puncak’s OS 606 40-43 SCHEME 1 44 Creditor Position as at 31.12.2025 45-48 Encl 1 49-52 SA Puncak – the Roadblock 53-55 Voting Analysis 56-58 Commercial Aspects of the Scheme 59-63 Commercial Absurdity 64-66 A Reconfiguration of the Scheme 67-68 SCHEME 2 & CROSS-CLASS CRAMDOWN 69-73 Section 368D of CA 2016 74-82 SANCTION OF A CROSS-CLASS SCHEME 83-85 Cross-class Schemes 86-87 Sanction in a Cross-class Scheme 88-90 Cross-class Schemes & The Fairness Test for Sanction 91-94 S/N brjYoqGaAk6eYedupCP1yQ The 3rd Stage Fairness in a Cross-class & Rejection of the Rationality Test 95-96 The Question 97-104 The Test in a Cross-class Scheme 105-111 THE CONVENING ORDER IN A CROSS-CLASS SCHEME 112 The 1st & 2nd Grounds 113 The 3rd Ground: Roadblock & Fairness 114-116 The 4th Ground: Abuse 117-126 The Commercial Aspects of Scheme 2 127-129 The Absolute Priority Rule 130-132 CONCLUSION 133-135

Encl 1 prays for an order under s. 366 giving the Applicant (“KL Petrogas”) liberty to convene meetings of its creditors (“Scheme Creditors”) for the purposes of considering and if thought fit, approving a scheme of arrangement (“the Scheme”) between KL Petrogas and its Scheme Creditors (“Convening Order”). Encl 1 also prays for restraining orders under s. 368(1).

In short, the Scheme seeks to compromise the debts of all Scheme Creditors. All these creditors are unsecured and for voting purposes, could legitimately be placed in 1 class. S/N brjYoqGaAk6eYedupCP1yQ

In a conventional scheme, KL Petrogas would first obtain an order convening a meeting of the Scheme Creditors under s. 366(1) to approve the proposed Scheme. If approved by the statutory majority of 75% of the creditors, the Court may sanction the scheme under s. 366(3) so as to be binding between KL Petrogas and its Scheme Creditors (“Conventional Scheme”). The Conventional Scheme under s. & the Statutory Veto

What is significant is that the Respondent, SA Puncak Management Sdn Bhd (“SA Puncak”) holds more than 25% of the total debt of the unsecured creditors. For a scheme involving 1 class of unsecured creditors, SA Puncak with more than 25% of the vote is in a position to prevent the statutory majority under s. 366(3) from being achieved. In short, by s.366(3), it has the power to veto a scheme proposed, whereby such scheme will be doomed to fail. It follows that no Convening Order should be made as no Court will act in vain

In negotiations with KL Petrogas, SA Puncak has made it clear that it will oppose and effectively veto any scheme of arrangement proposed by KL Petrogas. SA Puncak is correct in describing its objection when exercising a statutory veto vote as a ‘roadblock’ to convening or sanctioning the proposed scheme. S/N brjYoqGaAk6eYedupCP1yQ

I dealt with such ‘roadblocks’ in ASM Development Sdn Bhd v Badan Pengurusan Bersama Lingkaran Maju [2024] MLJU 3502 (“ASM”) at paras 19 to 21: “[19] Apart from jurisdictional issues, it is also open to the Court to consider factors which will prevent a Court from sanctioning the scheme, commonly termed ‘roadblocks. In Re Noble Group Ltd (No 1) [2019] 2 BCLC 505, Snowden J (as he then was) said: “[76] What I do think that a scheme company can legitimately ask at the convening stage is for the Court to indicate whether it is obvious that it has no jurisdiction to sanction the scheme, or whether there are other factors which would unquestionably lead the Court to refuse to exercise its discretion to sanction the scheme . This is often described as the question of whether there is a ‘roadblock ‘in the way of the Company. That was, I think, the real thrust of the points being made by David Richards J in T&N and by Hildyard J in Apcoa (No 1).” … [21] One such ‘roadblock’ would be if more than 25% of the creditors in any class undeniably refuse to approve the scheme whereby the scheme would be bound to fail. Mohd Arief Emran Arifin J dealt with this point in Damai City Sdn Bhd v Grand Dynamic Builders Sdn Bhd & Ors [2024] MLJU 633 at paras [20] to [23]. And did Atan Mustaffa J in KNM Group Berhad v. Ann Joo Metal Sdn Bhd (2024) OS NO: WA-24NCC-643-11/2023 (8.4.2024) (Broad Grounds) at paras [39] to [55].”

SA Puncak’s position presented a stark problem for KL Petrogas’ scheme. The difficulty was that by whatever SA Puncak’s debt is ascertained, whether as a contingent claim of S/N brjYoqGaAk6eYedupCP1yQ RM46,752,946 at para 42 below, or RM23,376,473.58 at para 29 below, or RM9,437,274.26 as per the SA Judgment in Suit 787 (see para 36c. below), will be over 25% of the total base vote and thus constitute a statutory veto vote.

KL Petrogas’ solution is to implement a ‘cross-class cram down’ within s. 368D to push its scheme through.

The background facts are taken from Encl 2 and the summary of Counsel for KL Petrogas’ submissions in Encl 93 for which I am grateful.

KL Petrogas is insolvent. That was not always the case. KL Petrogas possesses a Petronas SWEC Licence expiring on 10.1.2028. It maintains that it had several ongoing projects as out in para 16 et. seq. of Encl 2.

One of these is a subcontract awarded by Malaysia Marine and Heavy Engineering Sdn Bhd under the Technip MMHE JV (“TMJV”) on 28.7.2023. It is for baseline survey works under the Kasawari Gas Development Project, valued at approximately RM16.8 million (“Kasawari Sub-Contract”). The SA Facilities S/N brjYoqGaAk6eYedupCP1yQ

KL Petrogas obtained various facilities from SA Puncak to finance this Kasawari Sub-Contract and related operations. Such facilities included an Islamic factoring facility, an Islamic pre-factoring facility, as well as a series of supplemental or one-off pre-factoring facilities (collectively, “the SA Facilities”). The SA Facilities exceeded RM22 million.

In support of the SA Facilities, the agreements executed between the parties were framed under Shariah principles, namely Bai’ Dayn Bi Al-Sila for the factoring facility and Murabahah via Tawarruq for the pre-factoring facility. The parties executed letters of offer, a Factoring-i Agreement, and a Facilities Agreement, all dated 11.10.2023, together with various supplemental letters signed thereafter. The facilities were secured by, inter alia, a Debenture executed by KL Petrogas over its present and future assets.

Between January and May 2024, approximately RM22.19 million was drawn down on the SA Facilities, mainly towards direct payment to suppliers. KL Petrogas also issued invoices to its main contractor, TMJV, from which payments totalling about RM11 million were repaid directly to SA Puncak.

By November 2024, SA Puncak’s statements showed a sum of RM19.3 million as outstanding from KL Petrogas. Termination of the Kasawari Sub-Contract S/N brjYoqGaAk6eYedupCP1yQ

On 25.1.2025, SA Puncak terminated the SA Facilities and demanded full repayment. It was inevitable that on 14.2.2025, SA Puncak sought to appoint Receivers and Managers (“R&Ms”) over KL Petrogas pursuant to the Debenture.

At the time of appointment of the R&Ms, KL Petrogas had liabilities of about RM34,682,522. A large portion of these liabilities were incurred in relation to the Kasawari Sub-Contract.

TMJV was notified of the appointment of the R&Ms, which in turn, expressed concerns about the continuation of the Kasawari Sub-Contract. Shortly thereafter, TMJV issued a notice of termination relying on, inter alia, a cross-default by the appointment of the R&Ms on 28.3.2025.

As at 31.12.2024, KL Petrogas had a potential claim of RM10,358,713.73 against TMJV. It was also to commence work on the last portion of the Kasawari Sub-Contract by May 2025 but, it is alleged, was prevented by the appointment of the R&Ms.

KL Petrogas alleges that the appointment of the R&Ms had crippled its business (see para 32 to 41, Encl 2). It contended that the R&Ms dismissed key staff, jeopardised its Petronas licence, failed to defend a creditor’s winding-up proceedings and attempted to transfer the subcontract to another company allegedly favoured by SA Puncak. S/N brjYoqGaAk6eYedupCP1yQ SUIT 787 BY KL PETROGAS

KL Petrogas contended that the SA Facilities were, in substance, moneylending transactions disguised as Islamic factoring; that the “profit” charged by SA Puncak was in reality illegal usurious interest sanitised as Islamic ‘profit’, in breach of the Moneylenders Act 1951 (“the MLA”). Further, it was claimed that SA Puncak did not possess a licence under the MLA to undertake this ‘lending’ and thereby, breached the protections afforded by the MLA to ‘borrowers’ such as KL Petrogas.

On 6.5.2025, KL Petrogas commenced Suit No. WA-22M-787- 05/2025, against SA Puncak in the KL Muamalat Court (“Suit 787”). It contended (as above) that the advance of monies by SA Puncak under the pre-factoring facilities were illegal moneylending transactions and the profits charged were disguised interest at a rate exceeding 100% of the principal advanced.

The final relief sought by KL Petrogas in Suit 787 against SA Puncak, was for the SA Facilities and agreements to be declared void for contravening the MLA. Suit 787 & the Interlocutory Orders S/N brjYoqGaAk6eYedupCP1yQ

In Suit 787, KL Petrogas sought interlocutory relief in 2 forms: first, a mandatory injunction directing SA Puncak to uplift the appointment of the R&Ms; and second, an injunction restraining SA Puncak from appointing any other R&Ms pending the final determination of Suit 787.

On 7.7.2025, the Court allowed KL Petrogas’s application uplifting the R&Ms. Dissatisfied, SA Puncak appealed to the Court of Appeal.

On 23.10.2025, SA Puncak filed a counterclaim against KL Petrogas in Suit 787 on 30.6.2025 for RM23,376,473.58, and for RM19,345,808.58 allegedly arising under the pre-factoring facility together with ‘interest’ charges.

In Suit 787, KL Petrogas proposed that the legality (or otherwise) of the SA Financing be determined in an application (“the O14A”) under Order 14A of the Rules of Court 2012.

The O14A was filed by KL Petrogas on 28.8.2025. The learned Judge summarised the questions at KL Petrogas Sdn Bhd (Under Receivership) v SA Puncak Management Sdn Bhd & Ors [2026] MLJU 26 at para 35 S/N brjYoqGaAk6eYedupCP1yQ “[35] … The Order 14A application accordingly prays for the following reliefs: “1. That the following questions to be answered by this Honourable Court: - a. Question 1: Is the 1st Defendant’s activity pursuant to the agreements/documents listed in “Annexure A” an activity of money lending? b. Question 2: If the answer to Question 1 is in the affirmative, is the 1st Defendant’s activity of money lending carried on without a valid license issued under s. 5 the Moneylenders Act 1951? c. Question 3: If the answer to Question 2 is in the affirmative, are the agreements / documents listed in “Annexure A” unenforceable by the 1st Defendant against the Plaintiff pursuant to s. 15 of the Moneylenders Act 1951? d. Question 4 In the event the various agreements are found to be illegal, can the 1st Defendant claim the principal sums of RM12,909,441.24 from the Plaintiff under the causes of action of unjust enrichment and monies had and received?”.

Following this, SA Puncak amended its counterclaim on 9.9.2025 replacing its RM19,345,808.58 claim with the higher claim of RM23,376,473.58; an alternative remedy of restitution of the principal sum advanced was also introduced (now collectively, “SA 787 Counterclaim”). S/N brjYoqGaAk6eYedupCP1yQ

The SA 787 Counterclaim remains an action in debt, contractual and restitutionary in nature for RM23,376,473.58 arising from the SA Facilities. If the Order 14A determines that SA Puncak is not an illegal money lender, then it will be a creditor for RM23,376,473.58, or about 50% of the total claims of KL Petrogas’ creditors.

The O14A (on the 4 questions of law) was fixed for hearing on 28.10.2025 and for decision on 21.11.2025.

On 5.1.2026, Yusrin Faidz Yusoff JC in his grounds at KL Petrogas v SA Puncak (2026) (supra), answered all 4 questions in the affirmative. His Lordship, at para 71: a. declared that the agreements, in respect of the pre-factoring facility, were entered into while SA Puncak acted as an unlicensed moneylender; b. declared those agreements, in respect of the pre-factoring facility, are unenforceable against KL Petrogas under s.15 MLA; and c. dismissed the SA 787 Counterclaim for profit or interest, but ordered restitution under the said counterclaim by KL Petrogas in favour of SA Puncak for the principal of RM9,437,274.26 (“the SA Judgment”). S/N brjYoqGaAk6eYedupCP1yQ

As a result, SA Puncak’s status has now crystallised. It is at the least, a creditor of KL Petrogas to the limited extent of the principal sum of RM9,437,274.26. The SA Judgment is restitutionary in nature and without more, is unsecured.

On 8.1.2026, Yusrin JC in Suit 787 made another important finsing. He found that the Debenture executed by KL Petrogas in favour of SA Puncak was void to the extent of securing the pre-factoring facility.

Hence, by this order and absent a Debenture, the SA Judgment in favour of SA Puncak is an unsecured debt, no different from the other creditors of KL Petrogas.

In reaction to Yusrin JC’s judgment and rulings, SA Puncak: a. appealed the SA Judgment of RM9,437,274.26 with a view of being awarded the full amount of RM23,376,473 under its SA 787 Counterclaim; b. claimed that based on the SA Judgment, it may veto any scheme that KL Petrogas proposes for its Scheme Creditors.

Prior to the decision on the O14A, on 23.10.2025 and without notice, SA Puncak commenced KL High Court OS No. WA-S/N brjYoqGaAk6eYedupCP1yQ 15 24NCC-606-10/2025 (“OS 606”) for damages based in conspiracy to injure against KL Petrogas, its directors and associated entities for the identical sum of RM23,376,473.58 claimed in Suit 787. SA Puncak chose to maintain both its contractual and restitutionary claim in Suit 787 while simultaneously pursuing its damages claim OS 606 in tort. It is said that its claim in Suit 787 for RM23,376,473 is different from its claim in Suit 606, essentially, SA Puncak is contending that it has a total claim of RM46,752,946.

Although it raised an eyebrow, I will not comment on the propriety of OS 606 as it has little impact on the issues in this application for a Convening Order.

In short, it appears that SA Puncak is contending that it is a contingent creditor for RM46,752,946, over and above the SA Judgment of RM9,437,274.26. In turn, KL Petrogas also appealed the order of the High Court awarding RM9,437,274.26 to SA Puncak.

This is a veiled warning. If KL Petrogas succeeds in its appeal, SA Puncak risks having the RM9,437,274.26 overturned and may be left with nothing.

KL Petrogas’ proposed Scheme (“Scheme 1”) is set out below. S/N brjYoqGaAk6eYedupCP1yQ

As at 31.12.2025 the following are said to be the creditors of KL Petrogas: Statutory Creditors a. statutory and preferential creditors who will be excluded from any scheme; Non-Statutory Creditors b. unsecured creditors, being trade creditors, a judgment creditor, other miscellaneous creditors and various employees; c. SA Puncak, now claiming to be a contingent creditor vide a suit brought under OS 606; or the appeal by SA Puncak by in Suit 787; or at the very least, it is a creditor under the SA Judgment for RM9,437,274.26 in Suit 787.

As stated above, KL Petrogas is insolvent. It appears that and if it is immediately wound up, there is not enough to pay its statutory creditors. Hence, this means that all non-statutory creditors are “out of the money”.

KL Petrogas, however, maintains that it has existing contracts which it is said, can generate future revenue which will be used S/N brjYoqGaAk6eYedupCP1yQ to repay its creditors. In order to perform these contracts, KL Petrogas accepts that it: a. requires working capital and must be in a financial condition to raise working capital; b. requires joint venture partners with expertise and working capital requirements that exceed its in house capability; c. must be a going concern and is capable of being objectively viewed by possible financiers and future partners as being able to continue its business without litigation; d. must repay its legacy debts.

As matters stood, KL Petrogas maintains that it could have proposed a commercially acceptable scheme to its unsecured creditors to repay them on a deferred pari passu basis.

On 23.7.2025, KL Petrogas filed this Encl 1 for orders to convene meeting(s) of its Scheme Creditors, for such creditors to consider and if thought fit, approve its scheme (“Scheme 1”) with its Scheme Creditors, who are all unsecured creditors. S/N brjYoqGaAk6eYedupCP1yQ

By Scheme 1, it was proposed that there be 1 class of unsecured creditors who would be repaid on a pari passu basis over time. By an affidavit affirmed on 8.1.2026 (Encl 89), KL Petrogas proposed that all unsecured creditors be placed into 1 class for the purposes of voting.

The total unsecured debt to be compromised under Scheme 1 was RM31,870,641.13 where Scheme Creditors are not asked to waive any part of their debt or take a “haircut”. All that was asked for was for repayment to be deferred over a period of 2 years. It is alleged that there would be sufficient cashflow to repay the creditors from the existing contracts referred to in para 16 of Encl 2.

In relation to SA Puncak, Scheme 1 only recognises that the SA Judgment sum of RM9,437,274.26 will be admitted to the scheme meeting for voting.

SA Puncak took a very aggressive stance to Scheme

1.

It applied to intervene on 6.8.2025 and the intervention was granted on 3.9.2025. By SA Puncak’s affidavit affirmed on 19.9.2025 (Encl 27), and their submissions dated 28.11.2025 in Encl 57, SA Puncak stated that its position amounted to a “roadblock” to the scheme in that they would vote against the S/N brjYoqGaAk6eYedupCP1yQ scheme proposed by KL Petrogas which it held more than 25% of the total debt.

It is not disputed that SA Puncak may veto Scheme 1 if SA Puncak is placed together with other Scheme Creditors in a single class. By paras 6 to 13 of an affidavit of KL Petrogas affirmed on 12.12.2025 (Encl 71), it seems clear that KL Petrogas accepts that Scheme 1 is doomed to fail as KL Puncak (with the SA Judgment alone) could veto Scheme 1 and was adamant to vote against and oppose it.

KL Petrogas takes the following position on the voting analysis.

The amount of RM31,870,641.13 was ascertained as the total Debt of the Scheme Creditors. An analysis of the creditors eligible to vote is as follows: a. SA Puncak, on the SA Puncak Judgment of RM9,437,274.26, comprises approximately 29% of the total unsecured debt to be compromised; b. the other Scheme Creditors hold debt of around RM22,433,366.87 and constitute approximately 71% of the unsecured creditors; S/N brjYoqGaAk6eYedupCP1yQ c. the unsecured creditors who agreed to a restraining order is RM16,497,266.85 (see KL Petrogas’ Affidavit at Encl 61, p. 193). Hence, this ‘group’ of unsecured creditors appears to be in favour of approving a Scheme 1 constitutes around 51% of the total debt; d. the value of unsecured creditors as a percentage of total value of proposed scheme creditors excluding SA Puncak, a grouping of creditors other than SA Puncak is around 73.5%.

In this regard, KL Petrogas submits that if a scheme is proposed excluding SA Puncak, there is a strong possibility that other creditors (“the Remaining Creditors”) would vote in favour.

The commercial aspect of Scheme 1 has not changed. In Encl 2 at paras 43 to 45 of Encl 62, KL Petrogas explained that: a. by the first quarter of 2026, KL Petrogas expects to generate available cash of approximately RM2 million to repay creditors, reducing the total debt to RM29 million; b. by the third quarter of 2026, cash reserves are projected to increase to RM5 million, reducing the total debt to RM24 million; S/N brjYoqGaAk6eYedupCP1yQ c. by the third quarter of 2027, KL Petrogas anticipates another RM5 million, thereby reducing the total debt to RM19 million.

The cash reserves will be generated from the ongoing Carigali Hess project.

Scheme 1 does not propose a haircut on principal sums. Scheme Creditors will be asked to waive interest, penalties, enforcement, winding-up, legal demands and suits until the end of the third quarter of 2027.

In return for creditor forbearance, KL Petrogas undertakes to formulate a supplementary scheme proposal by the second quarter of 2027 addressing the estimated RM19 million balance that remains unsettled under the present Scheme 1. It is therefore a ‘bridging scheme’ in a way, similar to that in Thames Water (at para 87 b below).

It was submitted that these are commercial aspects of the proposed scheme to be decided by the creditors.

KL Petrogas is highly critical of SA Puncak’s stance. It is not disputed that KL Petrogas has little or no physical or tangible assets. Its only assets were and will be receivables from S/N brjYoqGaAk6eYedupCP1yQ ongoing contracts being carried out by sub-contractors of KL Petrogas. Scheme 1 envisaged that the creditors will be paid in full although payments will be deferred over the time required to complete these contracts.

KL Petrogas submits that if Scheme 1 fails, KL Petrogas would be wound up. This Comparator would mean the death of KL Petrogas as neither the project owners nor the sub-contractors would deal with a wound-up KL Petrogas.

The recovery for ordinary unsecured creditors would be nil. Counsel for KL Petrogas was openly antagonistic of SA Puncak’s stand, claiming, in effect, that SA Puncak was being irrational as it would receive noting in the Comparator as opposed to full (although deferred) repayment of the SA Puncak Judgment under Scheme 1.

As a result, Counsel for KL Petrogas sought to formulate a variation of Scheme 1 to get round the stance taken by SA Puncak.

One was to propose 2 Schemes: one for SA Puncak and one for the remaining unsecured creditors. It quickly became apparent that these alternatives will fail. SCHEME 2 & THE CROSS-CLASS CRAMDOWN S/N brjYoqGaAk6eYedupCP1yQ

Counsel for KL Petrogas finally suggested that he would be invoking the cross-class cramdown provisions in s. 368D. The objective was to compromise all the creditors of KL Petrogas who, as stated above, are unsecured creditors (“Scheme 2”). The terms of Scheme 2 are attached to the Convening Order I made at Encl 143 (Lampiran A). The abbreviations in Lampiran A may not coincide with those used in these Grounds.

Scheme 2 was to proceed with 1 Scheme but with 2 classes. The first class (“Class B”) will comprise SA Puncak alone. The second class (“Class A”) will comprise all other creditors. All creditors in both classes will be subject to the same moratorium and will be paid pari passu. The strategy is this. If the voting in Class A would achieve 75%, s. 368D could then be relied on to cram down the entire Class B, albeit containing only 1 creditor, SA Puncak.

It is an audacious move. Counsel for KL Petrogas unashamedly admitted that the sole purpose of putting SA Puncak into a separate class was to cram it down assuming of course, the statutory majority for Class A could be achieved. Ex facie, this move seems premeditated and harsh.

Whether this option is permissible is a question I found difficult to answer. S/N brjYoqGaAk6eYedupCP1yQ

The starting point is the Malaysian legislation permitting a cross-class cram down itself. Analagous legislation in other jurisdictions are listed in para 85 below.

Convening orders for cross-class schemes will first have to be obtained under s. 366(1). This is the object of Encl 1. Court sanction may be obtained under s. 368D(2). The real difference is that unlike conventional schemes, it is unnecessary get the approval of all classes (including the dissenting class) before sanction may be ordered under s.

For the sake of completeness, the Malaysian s. 368D is reproduced below. “Power of Court to cram down

(1) This section applies where—

a compromise or arrangement between a company and its creditors or any class of those creditors has been voted on at a relevant meeting;

the creditors meant to be bound by the compromise or arrangement are placed in two or more classes of creditors for the purpose of voting on the compromise or arrangement at the relevant meeting; S/N brjYoqGaAk6eYedupCP1yQ

the conditions in subsection 366(3), in so far as they are applicable, are satisfied at the relevant meeting in respect of at least one class of creditors; and

the conditions in subsection 366(3), in so far as they are applicable, are not satisfied at the relevant meeting in respect of at least one class of creditors, each called in this section a dissenting class.

Notwithstanding subsections 366(1) and (3), the Court may, subject to this section and on the application of the company, or a creditor of the company who has obtained the leave of the Court to make an application under this subsection, approve the compromise or arrangement, and order that the company and all classes of creditors concerned shall be bound by the compromise or arrangement.

The Court may make an order under subsection (2) if—

a majority of seventy-five per centum of the total value of creditors or class of creditors or members or class of members who were meant to be bound by the compromise or arrangement, and who were present and voting either in person or by proxy at the relevant meeting, have agreed to the compromise or arrangement; and

the Court is satisfied that the compromise or arrangement does not discriminate unfairly between two or more classes of creditors and is fair and equitable to each dissenting class.

For the purposes of paragraph (3)(b), a compromise or S/N brjYoqGaAk6eYedupCP1yQ arrangement is fair and equitable to a dissenting class if the following conditions are fulfilled:

no creditor in the dissenting class receives, under the terms of the compromise or arrangement, an amount that is lower than the amount to be received by the creditor as estimated by the Court in the most likely scenario if the compromise or arrangement does not become binding on the company and all classes of creditors concerned meant to be bound by the compromise or arrangement; and

either of the following applies:

where the creditors in the dissenting class are secured creditors, the terms of the compromise or arrangement—

(A) shall provide for each creditor in the dissenting class to receive deferred cash payments totalling the amount of the creditor’s claim that is secured by the security held by the creditor, and preserve that security and the extent of that claim, whether or not the property subject to that security is to be retained by the company or transferred to another entity under the terms of the compromise or arrangement;

(B) shall provide that where the security held by any creditor in the dissenting class to secure the creditor’s claim is to be realised by the company free of encumbrances, the creditor has a charge over the proceeds of the realisation to satisfy the creditor’s claim that is secured by that security; or S/N brjYoqGaAk6eYedupCP1yQ

(C) shall provide that each creditor in the dissenting class is entitled to realise the indubitable value equivalent to the security held by the creditor in order to satisfy the creditor’s claim that is secured by that security; or

(ii) where the creditors in the dissenting class are unsecured creditors, the terms of the compromise or arrangement—

(A) shall provide for each creditor in that class to receive property of a value equal to the amount of the creditor’s claim; or

(B) shall not provide for any creditor with a claim that is subordinate to the claim of a creditor in the dissenting class, or any member, to receive or retain any property on account of the subordinate claim or the member’s interest.

The Court may require the insolvency practitioner appointed under subsection 367(3) to assist the Court in estimating the amount that a creditor is expected to receive in the most likely scenario if the compromise or arrangement does not become binding on the company and all class of creditors meant to be bound by the compromise or arrangement.

In this section, “relevant meeting” means—

where the compromise or arrangement in question is subject to a revote under subsection 369A(1), the meeting held for that purposes; or S/N brjYoqGaAk6eYedupCP1yQ

the meeting ordered by the Court under subsection 366(1) or, if that meeting is adjourned under subsection 366(2), the adjourned meeting.”

The cross-class regime, as I understand it, works in this way.

First, an order for the convening meetings of creditors of a company must be obtained under s. 366(1). There must be more than 1 class of creditors, s. 368D(1)(b). At least 1 class must have satisfied s. 366(3) (“the Assenting Class”): that at least 75% of creditors present and voting must have approved the scheme, s. 368D(1)(c). Lastly, in at least 1 class, 75% of creditors have not approved the scheme within s 366(3) (“the Dissenting Class”), s. 368D(1)(d).

The Court may approve the scheme under s. 368D(2), irrespective of ss. 366(1) and (3) if the conditions in s. 368(1)(D)(3)(a) and (b) are met in that 75% of the total value of creditors of a class of creditors have agreed to the scheme; and the Court is satisfied that the scheme does not discriminate unfairly between 2 or more classes of creditors and is fair and equitable to each Dissenting Class.

Clearly, under s. 368(1)(D)(3)(a) and (b) the approval of at least 1 Assenting Class is needed as a gateway for the Cross-class cram down regime to work; however, the key to the section is that: S/N brjYoqGaAk6eYedupCP1yQ “the Court is satisfied that the compromise or arrangement does not discriminate unfairly between 2 or more classes of creditors and is fair and equitable to each dissenting class”.

“Fairness” seems to be the overriding concept.

It is clear enough that a Convening Order will not be made (see paras 112 below) if there is a roadblock or blot, being a reason why a Court will refuse to sanction the scheme; or if the scheme was an abuse of process.

First, I will deal with the requirements of sanction to determine whether the structure or terms of Scheme 2 is so flawed so as to constitute an obvious roadblock or abuse that will prevent me from granting a convening order.

I start with the test in a Conventional Scheme.

I set out the test for sanction for conventional schemes in KNM Group Bhd & Anor v Hitachi Zosen Corporation & Ors [2025] MLJU 1234 (“KNM No. 1”) at para 135 et seq: “[135] In this context, it is important to understand what exactly is meant by ‘merits’ and ‘fairness’. [136] The ‘merits’ are generally issues that are dealt with by the Court at sanction. They go to the exercise of discretion and are S/N brjYoqGaAk6eYedupCP1yQ rightly left to the sanction Court at sanction, see Justice Ong Chee Kwan in Airasia X at para 39. [137] What is within the remit of the sanction Court is generally outside the remit of the Convening Court. These are ‘the merits’, which comprise the four (4) stages of the Buckley test, as set out by Snowden J in Re Noble Group Ltd (No. 2) [2018] EWHC 3029 at para 17. ‘[17] There are, accordingly, four stages to be gone through under the Buckley test:

At the first stage, the Court must consider whether the provisions of the statute have been complied with. This will include questions of class composition, whether the statutory majorities were obtained, and whether an adequate explanatory statement was distributed to creditors.

(ii) At the second stage, the Court must consider whether the class was fairly represented by the meeting, and whether the majority were coercing the minority in order to promote interests adverse to the class whom they purported to represent.

(iii) At the third stage, the Court must consider whether the scheme is a fair scheme which a creditor could reasonably approve. Importantly it must be appreciated that the Court is not concerned to decide whether the scheme is the only fair scheme or even the ‘best’ scheme. S/N brjYoqGaAk6eYedupCP1yQ

(iv) At the fourth stage the Court must consider whether there is any ‘blot’ or defect in the scheme that would, for example, make it unlawful or in any other way inoperable.” [Emphasis mine] [138] In Re Telewest Communications plc (No 2) [2005] 1 BCLC 772, David Richards J (as he then was) explained the Buckley test at sanction thus: ‘[20] The classic formulation of the principles which guide the court in considering whether to sanction a scheme was set out by Plowman J in Re National Bank Ltd [1966] 1 All ER 1006 at 1012, ; [1966] 1 WLR 819 at 829 by reference to a passage in Buckley on the Companies Acts (13th edn, 1957) p 409, which has been approved and applied by the courts on many subsequent occasions: ‘In exercising its power of sanction the court will see, first, that the provisions of the statute have been complied with; secondly, that the class was fairly represented by those who attended the meeting and that the statutory majority are acting bona fide and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent, and thirdly, that the arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve. The court does not sit merely to see that the majority are acting bona fide and thereupon to register the decision of the meeting; but at the same time the court will be slow to differ from the meeting, unless either the class has not been S/N brjYoqGaAk6eYedupCP1yQ properly consulted, or the meeting has not considered the matter with a view to the interests of the class which it is empowered to bind, or some blot is found in the scheme.’ [21] This formulation in particular recognises and balances two important factors. First, in deciding to sanction a scheme under s 425, which has the effect of binding members or creditors who have voted against the scheme or abstained as well as those who voted in its favour, the court must be satisfied that it is a fair scheme . It must be a scheme that ‘an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reason ably approve’. That test also makes clear that the scheme proposed need not be the only fair scheme or even, in the court’s view, the best scheme. Necessarily there may be reasonable differences of view on these issues. [22] The second factor recognised by the above-cited passage is that in commercial matters members or creditors are much better judges of their own interests than the courts. Subject to the qualifications set out in the second paragraph, the court ‘will be slow to differ from the meeting’. [139] ‘Fairness’ is therefore part of ‘the merits’ to be considered at sanction. It is determined by the test of whether ‘an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve’. [140] This is the ‘limited rationality test’. And it is described as a ‘rationality check’ on the commercial judgment of the majority. Snowden LJ in the Court of Appeal in the UK In Re AGPS BondCo plc Strategic Value Capital Solutions Master Fund LP and others v AGPS BondCo plc [2024] EWCA Civ 24 said this: S/N brjYoqGaAk6eYedupCP1yQ ‘122. As David Richards J explained in Telewest at [21], under Part 26 the question of whether it is “fair” to impose a scheme upon the dissenting minority within a class is answered by applying a limited rationality test to the majority vote within that class. The court does not impose its own view of the commercial merits of the scheme, but asks a more limited question in relation to each class of whether the compromise or arrangement embodied in the scheme is one that “an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reason ably approve’. …”.

This is the fairness test in conventional schemes as described in the 3rd stage of the Buckley test (supra). It is the limited rationality test.

Legislation has been passed to introduce cross-class cramdown schemes (‘cross-class schemes’ for the sake of brevity). It all started with the United States §1129(b) in Chapter 11 of the United States Bankruptcy Code. Singapore followed the US model in s. 70 of Insolvency, Restructuring and Dissolution Act ("IRDA") in 2020. Malaysia’s s. 368D substantially adopted the Singapore version.

While I appreciate that the legislation in England for cross-class schemes is different from the Malaysian provisions, the English decisions are still helpful as the underlying principles S/N brjYoqGaAk6eYedupCP1yQ are similar. The English position is largely (for the time being at least) set out in a trilogy of decisions of the Court of Appeal comprising: a. Re BondCo plc Strategic Value Capital Solutions Master Fund LP and others v AGPS BondCo plc [2024] EWCA Civ 24 (“Adler”); b. Kington SÀRL and others v Thames Water Utilities Holdings Ltd and another [2026] 1 BCLC 377 (“Thames Water”); c. Saipem S.P.A. and other companies v Petrofac Ltd and another company [2025] EWCA Civ 821 (“Petrofac”), as helpfully explained by Hildyard J in Argo Blockchain PLC, Re [2025] EWHC 3395 (Ch).

Snowden LJ in Adler considered to what extent the Buckley test, which he summarised in Noble Group (supra), would apply to sanctioning a cross-class scheme under Part 26A of Companies Act 2006 (UK).

His Lordship held (at para 114) that the starting point is that the underlying concepts in the conventional scheme cases should apply to Part 26A cross-class schemes. He held that the 1st and 4th Stages would continue to apply and in respect of the S/N brjYoqGaAk6eYedupCP1yQ 35 2nd Stage, the Court would need to be satisfied that the class were not promoting interests adverse to the assenting class.

But he found that modifications were required to the 3rd Stage, being the limited rationality test which determines fairness of a conventional scheme, see para 122 of Adler. Cross-class Schemes & The Fairness Test for Sanction

What then is the test for fairness when sanctioning a cross-class scheme? The underlying applicable principles are these.

Cramming down the minority in conventional schemes is justified on the assumption that classes have been properly constituted. As Snowden LJ said in Adler: “121. It is the third stage of the test outlined in the first paragraph of the extract from Buckley and in my summary in Noble Group that requires the greatest modification in its application to cross-class cram down under Part 26A.

As David Richards J explained in Telewest at [21], under Part 26 the question of whether it is “fair” to impose a scheme upon the dissenting minority within a class is answered by applying a limited rationality test to the majority vote within that class. The court does not impose its own view of the commercial merits of the scheme, but asks a more limited question in relation to each class of whether the compromise or arrangement embodied in the scheme is one that “an intelligent and honest man, a member of the class S/N brjYoqGaAk6eYedupCP1yQ concerned and acting in respect of his interest, might reasonably approve”.

Almost invariably, under Part 26 this question is answered by the very fact of the vote in favour at each class meeting. The confidence that the court reposes in the decision of each class meeting in such circumstances is reinforced by the fact that the decision in favour of the scheme is the decision of an enhanced majority of 75% in value, rather than just a simple majority, of those who voted at the class meeting. Moreover, the greater the majority in favour at the class meeting, the greater confidence that the court can have that the scheme is in the interests of the class in question.

It is important to recognise, however, that this entire approach is dependent upon a number of fundamental assumptions.

The first, and most important for present purposes, is that it applies within a class of creditors that has been properly constituted, so that the majority and the minority in the class have a commonality of commercial interests based upon a sufficient similarity of their rights. The court's view that it would be fair to impose the scheme upon the dissenting members of the class, based only upon a rationality check on the commercial judgment of the majority, presupposes that the majority and minority have sufficiently similar commercial interests based upon their rights. If there is no such sufficient commonality of interests, then there can be no assumption that it is fair to impose the views of the majority upon a minority that is in a materially different commercial position.

The same logic also underpins the second assumption, which David Richards J expressly identified in Telewest at [22] by reference to the second paragraph of the extract from Buckley. If S/N brjYoqGaAk6eYedupCP1yQ the majority in a class can be seen to have voted in favour of a scheme to promote some extraneous interest adverse to the interests of the class, then the court would not be justified in relying upon their commercial judgment to impose the scheme upon the dissenting minority in the class.”

So, the reason why it is ‘fair’ in conventional schemes for the majority in a class to cram down the minority is because they have similarity of interests arising from a similarity of rights. This would allow them to consult together and it would be commercially acceptable for the minority to be crammed down.

This is not the case in a cross-class schemes. The 3rd Stage Fairness in a Cross-class & Rejection of the Rationality Test

It is important to appreciate the importance of the ‘fairness’ requirement. It is obvious that where the majority is being used to cram down an entire class of dissenting creditors, fairness becomes a fundamental consideration. In this regard, fairness is far more important in a cross-class scheme than in a conventional scheme, see Sarah Paterson in her paper Judicial Discretion in Part 26A Restructuring Plan Procedures at p 9.

Fairness is provided for in all 3 cross-class legislation in the US, Singapore and in Malaysia. In all 3 versions, the Court will S/N brjYoqGaAk6eYedupCP1yQ sanction a cramdown if it does not discriminate unfairly between two or more classes of creditors and is fair and equitable to each dissenting class. This was adopted from the US §1129 of Chapter 11. In the UK, these words are not expressly included in the Companies Act 2006 but the Explanatory Notes to Part 26A (Note 15) provide that the Court may refuse sanction if the Scheme is not fair and equitable. The meaning of ‘fair and equitable’ in s. 368D is (as is ‘just and equitable’ or ‘fairness’) contextual, see O'Neill and another v Phillips and others, Re a company (No 00709 of 1992) [1999] 2 BCLC 1 at p. 7. In the context of cross-class schemes within the overall scheme process, I am prepared to accept the meaning of ‘fairness’ as applied by the English Courts to Part 26A.

The question to be asked is whether it would be fair to impose the cross-class scheme on a class that has voted against it.

At the outset, the limited rationality test for fairness in a cross-class scheme must be rejected. There are cogent reasons why. I must say that I agree with Snowden LJ’s observations in Adler at paras 129 to 141.

First, if there is a dissenting vote across the class as a whole, fairness cannot be assumed as Parliament’s statutory threshold of 75% has not been met. S/N brjYoqGaAk6eYedupCP1yQ

Here, the assenting majority in 1 class is allowed to cram down an entirely different class whose rights (and interests arising therefrom) may be different from those of the creditors in the Assenting Class. Following the reasoning in Adler with respect to conventional schemes (see para 92 above) if the assenting majority in the Assenting Classes and the creditors in the Dissenting Class have no such commonality of interests arising from the similarity of rights, then there can be no assumption that it is fair to impose the views of the assenting class on the dissenting class.

Secondly, the limited rationality test in the 3rd stage of the Buckley test in a conventional scheme only operates as a ‘cross-check’ to the affirmative vote of the class. Adam Johnson J in Great Annual Savings Co Ltd [2023] Bus LR 1163 (as approved in Adler at para 141) said: “99. In scheme cases under Part 26, the concept of fairness has a particular role and is tested in a particular way. In short, a rationality test is used as a cross-check of fairness where there has been a majority vote in favour of a scheme by a particular class of creditor. The positive vote is not determinative: the court will also look to the terms of the scheme, in order to assure itself that it is fair to impose it on the dissentient minority.

In a Dissenting Class, there is no affirmative vote for the rationality test to ‘cross check’, see Sarah Paterson op. cit., at pp. 9-10. The test, as designed, cannot apply. S/N brjYoqGaAk6eYedupCP1yQ

Thirdly, in the absence of an affirmative vote, if the rationality test is applied, the Court will effectively be asked to determine the commercial fairness of the scheme for the Dissenting Class. In a way, this departs from the principle that the creditors are the best judges of what is in their best commercial interests and not the Court.

Lastly, in a cross-class scheme, it cannot be assumed that the enhanced majority across all the Assenting Classes are the best judges of what is in the best interests of the Dissenting Class with entirely different interests arising from their dissimilar rights. Indeed, an overwhelming vote of the Assenting Classes tells you nothing of the fairness of imposing a cross-class scheme on a Dissenting Class, whose interests arising from their rights are inevitably different.

What then is the test to replace the limited rationality test to determine fairness so as to bind the Dissenting Class.

Justice Mann suggested in Re Bluebrook Ltd [2009] EWHC 2114 at para 49 that the Court must be satisfied that creditors or shareholders were not getting ‘too good a deal’ or too much unfair value under the scheme. Sarah Paterson op. cit. at p. 19, in the same vein suggests that the fundamental question is whether the benefits of a restructuring scheme have been S/N brjYoqGaAk6eYedupCP1yQ shared fairly between all creditors. Similarly, Riz Mokal suggests that the ‘restructuring surplus’ must be fairly divided among all the creditors including the creditors of the dissenting class, see R. Mokal ‘The Two Conditions for the Pt 26A Cram Down’ (2020) 11 J.I.B.F.L. 730 ‘The Court’s Discretion in Relation to the Pt 26A Cram Down’ (2021) 1 J.I.B.F.L. 12.

This approach in defining ‘fairness’ was applied by Zacoroli J in Re Houst Ltd [2023] 1 BCLC 729 at para 29 and Snowden LJ in Adler at paras 157-161. Snowden LJ said this in Adler: “157. This point was first made explicitly by Trower J in DeepOcean at [63], when he said, “63. In my view, because a class' right of veto is removed by the operation of section 901G, justice may require the court to look at questions of horizontal comparability in the context of a cross-class cram down to see whether a restructuring plan provides for differences in treatment of creditors inter se, and if so whether those differences are justified. In particular the court will be concerned to ascertain whether there has been a fair distribution of the benefits of the restructuring (what some commentators have called the “restructuring surplus”) between those classes who have agreed the restructuring plan and those who have not.”

Zacaroli J expanded upon the same point in Houst Limited [2022] EWHC 1941 (Ch) (“Houst”) at [29]-[31], S/N brjYoqGaAk6eYedupCP1yQ “29. Finally, an important factor – particularly in considering sanction where the cross-class cram-down power is engaged – is whether the plan provides a fair distribution of the benefits generated [by] the restructuring (or, per Dr. Riz Mokal, the “the restructuring surplus” … ) between those classes who have agreed and those that have not.”

In my judgment, the horizonal comparison across different classes should not be taken too far as it involves a comparison of creditors with different interests arising from different rights. Nevertheless, a broad approach in the cross-class cases is needed given the findings that the rights based limited rationality test cannot apply and that it is inappropriate to look at the vote of the Assenting Classes to determine the fairness of imposing the scheme on the Dissenting Class.

A more general test based on an equitable allocation of the benefits of the cross-class scheme would seem to be the only sensible alternative. This test has been applied in both Thames Water and in Petrofac, at paras 106 to 108.

As such, I would accept that the test for fairness in a cross-class scheme is to ensure the fair distribution of the benefits generated in the restructuring.

I will now turn to the test to grant a Convening Order for a cross-class scheme. S/N brjYoqGaAk6eYedupCP1yQ

I summarised the test for granting a Convening Order under s. 366(1) in a conventional scheme in KNM No. 1 (supra). In my judgment, the test for a Convening Order in a Conventional Scheme is no different from that in a cross-class scheme. The test for granting Encl 1 is as per para 39 of KNM No. 1 (supra): “[39] From the authorities, it appears that at the Convening Hearing, the Court in exercising its discretion, will generally consider the following issues (which are not intended to be comprehensive).

The first is to determine jurisdictional or quasi-jurisdictional barriers. This usually involves (as it does here) ensuring that classification was proper, see Re Telewest (supra); Airasia X Bhd v BOC Aviation Ltd & Ors [2021] MLJU 189 (“Classification”).

Secondly, there must be full and frank disclosure of all material facts and matters which may be relevant to any decision that the Court is asked to make; and with sufficient disclosure to persuade the Court to ‘act’ by making the convening orders, see Re Indah Kiat International Finance Company BV [2016] EWHC 246 at para 40, (“Disclosure”).

Thirdly, a convening order will not be made if there are ‘roadblocks’ or other factors which would unquestionably lead the Court to refuse to sanction the scheme, see Re Noble Group Ltd (No 1) [2019] 2 BCLC 505 at para 76, (“Roadblocks”).

Lastly, the scheme must be bona fide and not an abuse of process, for example, to ‘game’ the system for the purpose of S/N brjYoqGaAk6eYedupCP1yQ obtaining restraining orders without a genuine and bona fide intention to restructure, see Re Conchubar Aromatics Ltd [2015] SGHC 322, (“Bona Fides”). …”. The 1st & 2nd Grounds

It seems to me that there is little wrong with treating all unsecured creditors similarly. In my judgment, in as far as disclosure is concerned, sufficient disclosure was made for me to make the Convening Order. This is despite the protestations by Counsel for SA Puncak relying on my own case in ASM (supra). However, ASM (supra) was different. There, the proposed scheme was not feasible with only fanciful hopes of achieving substantial returns on the sale of assets and collections from related parties, see paras 60 and 61 thereof. Here, what is offered is full repayment based on, inter alia, existing contracts, which as things stand should be given a chance to proceed. The 3rd Ground: Roadblock & Fairness

The rights of the Scheme Creditors in the Comparator are the same. They are unsecured creditors and in the liquidation of KL Petrogas (with no tangible assets), will likely receive nothing.

Here, what is proposed is that the returns under Scheme 2 from receivables under its various contracts and Projects S/N brjYoqGaAk6eYedupCP1yQ (being therefore considered to be the returns from the restructuring) is for all the unsecured Scheme Creditors to be repaid equally pari passu.

As such, I cannot see any unfairness in the distribution of the restructuring benefits. The 4th Ground: Abuse

This is the issue that troubled me the most. That there was a roadblock or that Scheme 2 was proposed in bad faith or what amounted to an abuse of the cross-class process.

The point is this. It is clear enough that SA Puncak was deliberately placed in Class A alone so that it would be crammed down if the creditors in Class B achieved the statutory majority. This is what KL Petrogas seeks to achieve.

This is said to be an abuse of s. 368D and is made in bad faith depriving SA Puncak of its right to veto Scheme 2. This is SA Puncak’s substantial complaint, see para 5(f), Encl 129, where Counsel submits that Scheme 2 was a “capricious use of the cram down provisions, to avoid R1 vetoing the scheme”.

SA Puncak would be correct in the case of a conventional scheme. The right to veto a conventional scheme does appear to be absolute, see ASM at paras 9 to 10 above. To deprive a S/N brjYoqGaAk6eYedupCP1yQ creditor with more than 25% of the vote to veto a scheme would, ex facie, be an abuse.

That has all changed with s. 368(D) and the cross-class scheme regime. It is said that the Hansard Debate on The Companies (Amendment) Bill 2023, which came into force in 2024 (Companies (Amendment) Act 2024) introduced the cram down mechanism and is telling.

Counsel for KL Petrogas, submitted that the Parliamentary debates (in Hansard on 28.11.2023) show a clear legislative purpose of introducing s. 368D to provide a mechanism to cram down a dissenting class: a. a cram down was described as a mechanism to compel dissenting creditors to accept a rehabilitation plan – “…cramdown adalah kuasa mahkamah memberi perintah mengarahkan persetujuan kelas pemiutang yang tidak bersetuju…” b. before a cram down may be exercised, the dissenting class must be no worse off than liquidation: “…mahkamah perlu berpuas hati bahawa amaun yang akan diterima oleh kelas pemiutang tersebut apabila SPK dilaksanakan hendak lah tidak rendah atau kurang berbanding sekiranya syarikat digulungkan.” S/N brjYoqGaAk6eYedupCP1yQ c. the cram down can benefit dissenting creditors: “…pengenalan peruntukan cramdown ini akan lebih menguntungkan pihak kelas pemiutang yang tidak bersetuju…” d. From the minutes, there is a liquidation comparator and fairness safeguards embedded in ss. 368D(3) to (4), to protect dissenting creditors in a cross-class scheme, while at the same time promoting corporate rescues in preference to windings-up, which are destructive both to the company and creditors.

An important purpose of a cross-class scheme to prevent unreasonable creditors with a veto right to hold out for a side deal and to frustrate the scheme. The Court of Appeal in Petrofac at para 131 said: “131 … As was made clear by the legislative history to which reference was made in Adler at §259 to §270, the primary purpose of the introduction of the cross-class cram down power under Part 26A was to allow the Court, in an appropriate case, to override the absence of assent in each class and thereby to prevent any one or more classes of creditors from exercising an unjustified right of veto.”

This means that a Dissenting Class’ absolute right to veto a scheme has gone, as was recognised by Trower J in Re S/N brjYoqGaAk6eYedupCP1yQ DeepOcean 1 UK Limited [2021] EWHC 138 (Ch) at para 63 (see para 107 above).

I can see no reason why a company may not take advantage of the cram down provisions to cram down a hostile creditor with a veto right in the appropriate case. After all, this is the very objective and purpose of the cram down legislation, to prevent a recalcitrant creditor from vetoing a beneficial scheme that is wanted by the other creditors. However, there are US decisions which do not approve of putting creditors with substantially similar rights and interests into different classes to engage the gateway to allow the cram down, see for example In Re Greystone III Joint Venture 995 F.2d 1274 (5th Cir. 1992), the US Court of Appeals for the Fifth Circuit imposed a fetter on the debtor company’s power to classify creditors of substantially the same rights except for reasons independent of the need to secure the vote of an assenting class. In this regard, there are also cases that exclude a creditor’s right to vote when that creditor is holding out for a better deal, see the US Supreme Court in Young v. Higbee Co, 324 U.S. 204 (1945). This purpose is implicit in the stance taken by KL Petrogas.

These grounds were not fully argued and I was reluctant to dismiss Encl 1 for insufficient research and without the full underlying facts. As they were not fully argued and are fact sensitive, I thought it is best left to be taken at sanction. S/N brjYoqGaAk6eYedupCP1yQ

In our case, the comparator is an insolvent winding up (“the Comparator”). In the Comparator, it was submitted that the returns would be negligible and will only be enough to repay the preferential creditors, see para 140 of Encl 2. The returns in a winding up to all unsecured non-statutory creditors will be nil. This is primarily because KL Petrogas is a service company with no tangible assets.

KL Petrogas submits that if revived, there would be returns from these existing contracts representing benefits under the restructuring. KL Petrogas anticipates full repayment to all creditors with a current provision of RM12m, see Encl 62 para 105.

By reason that under Scheme 2, all the proceeds will be distributed (albeit over time) pari passu amongst all the creditors in Class A and Class B, it appears that under Scheme 2, there will be a fair distribution of the restructuring benefits amongst all Scheme Creditors equally. It does not appear that anyone will be getting ‘too good a deal’ from Scheme 2.

Although no one has raised the issue, I should say something of the absolute priority rule(“APR”), which is fundamental to the success of a cross-class scheme. The APR was rejected in S/N brjYoqGaAk6eYedupCP1yQ England but remains in Malaysia. In short, the rule provides, as summarised by Zacaroli J in Houst (supra) at para 30 that, in essence, no junior class should recover until a senior class has recovered in full, and no senior class should recover more than it is owed.

While appearing in the earlier iterations of the Singapore legislation, it was removed on the enactment of IRDA. The reason was that unlike under Chapter 11, there is no mechanism under Singapore law to compulsorily divest shareholders of their shares under a scheme. Instead, shareholders had to voluntarily give up their shares in order to comply with the APR to successfully cram down dissenting unsecured creditors. Some commentators have noted that this would have been difficult to achieve in practice. Without the absolute priority rule, unsecured creditors could now be crammed down without the need for shareholders to give up their shares, see Ajinderpal Singh and Debbie Lim, the Cross-class Cramdown – Global Perspectives (14.12.2022).

Finally, there is no question of a change in the priority amongst creditors inter se as all rank pari passu both in the Comparator and under Scheme 2. The shareholders will not be granted any priority over the creditors, as all the creditors will be paid in full. Accordingly, there is no reason why the shareholders should not be able to retain their shares intact. CONCLUSION S/N brjYoqGaAk6eYedupCP1yQ

I repeat that there are issues such as the bona fides of KL Petrogas in placing SA Puncak in a single class to be crammed down. Similarly, SA Puncak’s motives in holding out may be challenged for being made in bad faith. Given that there has not been a full examination of the underlying facts on these issues and with incomplete research, I was content to allow these issues to be taken at sanction. I was not prepared to dismiss Encl 1 at this stage. This area is relatively new and some leeway should be given to the parties to fully explore teir arguments without precipitously ending the debate

As matters stand, there is no unfairness that I can see. Nor could I see any obvious roadblocks to prevent a convening order being made.

In the circumstances, I granted Encl 9, by way of the order in Encl 143. Dated the 27th day of April 2026 ..........................tt............................ YA TUAN SAHERAN SUHENDRAN S/N brjYoqGaAk6eYedupCP1yQ JUDICIAL COMMISSIONER OF THE HIGH COURT (COMMERCIAL 11) (INSOLVENCY 2) OF KUALA LUMPUR IN THE TERRITORY, MALAYSIA Case References: • Argo Blockchain PLC, Re [2025] EWHC 3395 (Ch) • ASM Development Sdn Bhd v Badan Pengurusan Bersama Lingkaran Maju [2024] MLJU 3502 • Great Annual Savings Co Ltd [2023] Bus LR 1163 • Kington SÀRL and others v Thames Water Utilities Holdings Ltd and another [2026] 1 BCLC 377 • KL Petrogas Sdn Bhd (Under Receivership) v SA Puncak Management Sdn Bhd & Ors [2025] MLJU 26 • KNM Group Bhd & Anor v Hitachi Zosen Corporation & Ors [2025] MLJU 1234 • O'Neill and another v Phillips and others, Re a company (No 00709 of 1992) [1999] 2 BCLC 1 • R. Mokal ‘The Court’s Discretion in Relation to the Pt 26A Cram Down’ (2021) 1 J.I.B.F.L. • R. Mokal ‘The Two Conditions for the Pt 26A Cram Down’

11 J.I.B.F.L. Counsel for the Applicant: Solicitors: Mak Lin Kum, Layyin Teh Binti Hassan, Sean Low Messrs. Mak LK & Co (Kuala Lumpur) Counsel for the Respondent: Solicitors: Melody Tham Cheng Yee & Bala Ravi Sankar Messrs. Raj, Ong & Yudistra (Kuala Lumpur) S/N brjYoqGaAk6eYedupCP1yQ • Re Bluebrook Ltd [2009] EWHC 2114 • Re BondCo plc Strategic Value Capital Solutions Master Fund LP and others v AGPS BondCo plc [2024] EWCA Civ 24 • Re DeepOcean 1 UK Limited [2021] EWHC 138 (Ch) • Re Greystone III Joint Venture 995 F.2d 1274 (5th Cir. 1992) • Re Houst Ltd [2023] 1 BCLC 729 • Saipem S.P.A. and other companies v Petrofac Ltd and another company [2025] EWCA Civ 821 • Sarah Paterson, Judicial Discretion in Part 26A Restructuring Plan Procedures • Young v. Higbee Co, 324 U.S. 204 (1945) Legislation References: • Companies Act 2006 (UK) • Companies Act 2016 (“CA 2016”) • Insolvency, Restructuring and Dissolution Act ("IRDA") in 2020 • Moneylenders Act 1951 (“the MLA”) • Order 14A of the Rules of Court 2012 Decision Date: 5th March 2026 S/N brjYoqGaAk6eYedupCP1yQ