The Grim Reaper Cometh, But Which One?

Author:Ms Eyza Farizan Mokhtar
Profession:Skrine & Co

Eyza Farizan Mokhtar examines a fight over the appointment of a provisional liquidator

Can a company hasten its impending death by committing suicide? While awaiting death, can a company choose its own executioner?

These were the issues faced by the High Court in Malayan Banking Berhad v Chip Lam Seng Enterprise Berhad [2014] 1 LNS 1583.

On 27 October 2014, the High Court decided that the Respondent could not avoid a compulsory winding up by undertaking a voluntary winding up. In coming to its decision, the High Court also discussed the court's power to appoint a provisional liquidator pending the disposal of a winding up petition.


The Respondent, Chip Lam Seng Enterprise Berhad, is the holding company of the "Chip Lam Seng" group of companies ("CLS Group"), a family business controlled by one Mr. Tan Keng Beng ("TKB").

The CLS Group was in financial difficulties and appointed Grant Thornton Consulting Sdn Bhd ("Grant Thornton") to prepare a debt restructuring proposal. Grant Thornton prepared a report dated 30 November 2012 which stated that as at December 2012, the CLS Group had a total debt of RM500,805,244 owing to 11 banks and RM10,746,766 owing to trade creditors. The Petitioner, Malayan Banking Berhad, was the largest creditor, holding 51.39% of the total indebtedness of the CLS Group.

On 19 December 2013, the Petitioner obtained a summary judgment against the Respondent for a sum of RM8,886,339.01. The Respondent did not appeal against the judgment.

After the Respondent had failed to comply with a notice issued under section 218(2)(a) of the Companies Act 1965 ("CA") in respect of the judgment sum, the Petitioner presented a petition to wind up the Respondent on 28 August 2014 and served the Petition on the Respondent at its registered address on the same day.

On 2 September 2014, the Petitioner's solicitors informed the Respondent's solicitors that the Petition had been filed and the Petitioner would be filing an application to appoint a Provisional Liquidator ("PL").

Two days later, on 4 September 2014, another firm of solicitors informed the Petitioner's solicitors that they had instructions to accept service of the Petitioner's application on behalf of the Respondent. On 5 September 2014, the Petitioner filed its application to appoint a PL. From the affidavits filed in the proceedings, it came to light that a flurry of events had taken place with devil's haste on 5 September 2014.

The Respondent's two directors affirmed a statutory...

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