The JM Applications were opposed by two substantial unsecured creditors on among others, the grounds that:
In response, the Applicants argued among others, that the JM Applications are a genuine attempt on the part of the Applicants as well as JCB to rehabilitate themselves. In this regard, JCB had taken various steps vis-à-vis the proposed business diversification, and to liquidate the assets of JASB and CASB. Based on the documents available, the Applicants have satisfied the requirements for a judicial management order to be made. The Applicants further argued that a detailed statement of proposal is not required at this stage. A comprehensive statement of proposal would be prepared and tabled by the Judicial Manager in due course, and the creditors can then vote on the same.
Decision of the High Court
The High Court was of the view that there is a possibility that the Applicants can be rehabilitated, and, on that basis, the JM Applications were granted. The High Court was cognisant of the fact that it is normal for a proposed plan to be lacking details at the application stage and the JM Applications should not be denied on this ground.
The High Court decision is consistent with an earlier decision of the same court in Federal Power Sdn Bhd v Dara Consultant Sdn Bhd
 7 MLJ 563 (“Federal Power
”) where the High Court allowed an application for judicial management order despite the opposition by an intervener on, among others, the grounds that it was not supported by any expert opinion and that no concrete plans had been proposed. In allowing the judicial management application in Federal Power
, the High Court held that “the actual recovery plan is to be properly and comprehensively prepared by the proposed judicial manager upon obtaining the judicial management order
The High Court decision in this case and the case of Federal Power
are interesting as it appears to be a departure from the High Court’s earlier decision in Re Biaxis
 7 MLJ 443 (“Re Biaxis”),
which sets out stringent requirements for the filing of a judicial management application. In this regard, the High Court in Re Biaxis
held that the applicant and/or the nominated judicial manager should demonstrate that they have used their best efforts to, inter alia,
get the proposal as close as possible to its final form. This suggests that the draft statement of proposal has to be substantive even at the application stage.
Following the decision in Re Biaxis
, it has been a common practice for judicial management applicants to have ready a detailed draft statement of proposal at the time of filing of the application or at least for the proposed judicial manager candidate to affirm an affidavit in support of the application. This is even though there is no such requirement under the Companies Act 2016, as acknowledged by the High Court in Federal Power
. With this recent decision as well as the decision in Federal Power
, it will be interesting to see if the Courts will adopt a more lenient approach in deciding whether or not to allow a judicial management application despite the absence of a detailed/comprehensive draft proposal.
Claudia Cheah (Partner) and Janice Ooi (Senior Associate) of the Restructuring and Insolvency Practice of Skrine represented the Applicants.