JUDGMENT

Nordin Hassan FCJ:

Introduction

[1] This is an appeal against the decision of the High Court Judge of Melaka not to sanction the appellant's proposed scheme of arrangement under s 366(1) of the Companies Act 2016 ("the CA") and consequently dismiss the appellant's application for a restraining order under s 368 of the same Act. The decision of the High Court was affirmed by the Court of Appeal.

[2] Aggrieved by the decision, the appellant applied for leave to appeal to the Federal Court and this was allowed with 10 questions of law posed to this Court for determination.

[3] The questions are as follows:

Question 1

Whether the votes of related-party creditors are to be treated differently from the votes of other creditors in the same class in the scheme of arrangement.

Question 2

If the answer to 1 is yes, whether the votes of related-party creditors in the scheme of arrangement should be discounted or not counted altogether.

Question 3

Whether the issue of proper classification of creditors should be determined at the Court leave stage (following the English Court of Appeal decision in Re Hawk Insurance Co Ltd [2001] 2 BCLC 480 and AirAsia X Bhd v. BOC Aviation Ltd & Ors [2021] MLRHU 2008) or only to be determined at the Court scheme sanction stage (following the Hong Kong of Final Appeal case of Re UDL Holdings Ltd [2002] 1 HKC 172)

Question 4

Whether the Court at the scheme sanction stage should be slow to depart from its earlier determination on the proper classification of creditors unless there are material changes in circumstances (following the English High Court decision of Re Lehman Brothers International (Europe) (In Administration) [2018] EWHC 1980 (Ch))

Question 5

Whether the challenge to the adequacy of disclosure in the explanatory statement issued under s 369(1)(a) of the Companies Act 2016 ("explanatory statement") should be at the stage before the Court approves the issuance of the explanatory statement or at the Court scheme sanction stage.