Who Gets a Seat at the Table? The Rights of Unsecured Creditors in Judicial Management
In the recent case of Desa Tiasa Sdn Bhd v. CME Group Berhad & Anor [2025] MLRAU 397 CA, the Court of Appeal provided much-needed clarity on a “crisp issue”: whether an unsecured creditor has the legal right to intervene in judicial management proceedings. The ruling reinforces the strict procedural boundaries set by the Companies Act 2016 and its accompanying rules.
The Dispute: A Creditor Left in the Cold
The case began when Bellajade Sdn Bhd, an unsecured creditor, sought to recover millions in rental arrears from CME Group Berhad. While Bellajade was attempting to wind up the company, Desa Tiasa Sdn Bhd applied to place CME Group under judicial management—a corporate rescue mechanism that halted the winding-up process.
Fearing their rights would be prejudiced, Bellajade applied to intervene in the judicial management proceedings. The High Court originally allowed this, citing the need to preserve the interests of creditors who might be affected by the court’s decision.
The Court of Appeal’s Ruling: Rules are Rules
The Court of Appeal overturned the High Court’s decision, ruling that unsecured creditors may not intervene in these specific proceedings. The court’s reasoning centered on several key legal points:
- The Specificity of the CRM Rules: Under Rule 13 of the Companies (Corporate Rescue Mechanism) Rules 2018, the law explicitly lists only two categories of people who may appear to oppose a judicial management order: secured creditors and those entitled to appoint a receiver or manager.
- Ousting General Procedures: While the general Rules of Court 2012 usually allow for intervention, the court held that Rule 2 of the CRM Rules ousts these general principles because a specific procedure for judicial management already exists.
- Harmonious Construction: The court rejected the idea that Rule 13 was “ultra vires” (beyond the power of) the Companies Act 2016. It clarified that because the parent Act does not explicitly grant unsecured creditors the right to attend, there is no conflict between the Act and the Rule—they must be read together harmoniously.
Correcting Legal Precedents
The High Court had previously relied on a case called Maybank Investment Bank v. Million Westlink to allow the intervention. However, the Court of Appeal noted that because no grounds of judgment were ever issued for that case, it could not be considered a binding authority.
The judges emphasized that when the “plain words of written law are clear,” the court must give effect to them. If the exclusion of unsecured creditors is seen as an undesirable result, it is up to the legislature, not the courts, to change the rules.
The Bottom Line This judgment establishes that judicial management is a specialized process with a restricted “guest list.” Only those with secured interests or specific statutory roles are permitted to formally oppose the application in court.
Disclaimer: This post is for informational purposes only and does not constitute legal advice. Please consult a qualified lawyer for your specific legal needs.
