A. INTRODUCTION

1. Much has been said about the locus standi of an unsecured creditor to intervene in a Judicial Management Proceeding. For context, a secured creditor is someone who is holding any mortgage, charge or lien on property of the debtor as a security for debt due to him from the debtor[1]. By contrast, unsecured creditors are those who do not fall within this legally defined category of secured creditors.

2. As of the date of this write-up, there are two conflicting decisions in the Court of Appeal in respect of this area of law – locus standi of an unsecured creditor to intervene:

1. In July 2020, the Court of Appeal in Maybank Investment Bank Berhad & Ors v Million Westlink Sdn Bhd (‘Million Westlink’)[2] held that an unsecured creditor has the legal capacity to intervene in a Judicial Management Proceeding.
2. Recently in December 2024, the Court of Appeal case in Desa Tiasa Sdn Bhd v Bellajade Sdn Bhd & Anor (‘Desa Tiasa’)[3], it was held that only a secured creditor can intervene in a Judicial Management Proceeding, thereby excluding an unsecured creditor from intervening (leave to appeal against this COA’s decision was granted on 29.07.2025).

3. The legal lobbyist for Desa Tiasa would argue that companies must be afforded the leeway to rehabilitate through Judicial Management Proceedings without interference by unsecured creditors, whereas the proponent of Million Westlink would contend that unsecured creditors — whose legal rights are affected by the proposed scheme under Judicial Management Proceeding — must be given their day in court.

B. WHY ARE THERE TWO SCHOOL OF THOUGHT?

4. The following provisions under the Companies Act 2016 (‘CA 2016’) and Company (Corporate Rescue Mechanisms) Rules 2018 (‘CCRM Rules 2018’) shape and render the two-opposing school of thoughts.

1. Section 409(a) and (b) CA 2016 provide that if these 2 categories of persons oppose the judicial management, the Court shall dismiss the Judicial Management. These persons are (1) a receiver or manager appointed or (2) a secured creditor.
2. Rule 13 CCRM Rules 2018 provides only 2 categories of persons who can oppose a judicial management application. These persons are (1) any person who has appointed / entitled to appoint a receiver or receiver and manager or (2) any secured creditor referred in s.409(b) CA 2016
3. These two provisions expressly recognize the rights of the secured creditors to be heard in the Judicial Management Proceedings, without extending such rights to the unsecured creditors.

5. In the High Court case of Goldpage Assets Sdn Bhd v Unqiue Mix Sdn Bhd [5], Justice Tuan Nadzarin Bin Wok Nordin wrote a succinct judgment on the legal capacity of an unsecured creditor to intervene in a Judicial Management Application. His Lordship’s legal rationale can be found at paragraphs [32] – [40] of the Judgment. In short:

1. Unsecured creditor can intervene in a Judicial Management Proceeding[5];
2. Nothing in the relevant provisions under Part III Division 8 Subdivision 2 of the CA 2016 that prevents any party from attempting to oppose the Judicial Management Order[6];
3. Section 409(a) and (b) CA 2016 merely mandates the dismissal of Judicial Management if a secured creditor appoints a receiver and manager[7];
4. Rule 13 CCRM Rules 2018 is a subsidiary legislation and must be read with the parent act – CA 2016[8]; and
5. Rule 2 CCRM Rules 2018 must also be referred to and parties can invoke the intervention provisions under the Rules of Court 2012 – Order 15 Rule 6(2)(b)(ii)[9].

6. The above legal rationale has been widely adopted in solicitors’ submissions who argue on behalf of unsecured creditors in Judicial Management Proceedings.

7. This legal position has also been accepted by the Court of Appeal case in Million Westlink.

Post Million Westlink

8. In the recent decision of Desa Tiasa (heard on 12.04.2024), the Court of Appeal held (in its broad grounds) that – Rule 2 read with Rule 13 CRM Rules 2018 clearly excludes unsecured creditors from participating at this stage.

C. JUDICIAL TRENDS IN RECENT TIME – POST MILLION WESTLINK & DESA TIASA

9. As of July 2025, the differing outcomes in the two Court of Appeal decisions present an open issue for determination by the High Court, given that no written grounds of judgment had been rendered in either decision at that juncture.

10. In March 2025, in the High Court case of Ace Holdings Berhad v koperasi Telekom Pahang Berhad & Ors (‘Ace Holdings’)[1], Judicial Commissioner Dato’ Raja Rozela binti Raja Toran allowed unsecured creditors to intervene in a judicial management proceeding on the grounds that:

1. First, no provisions in CA 2016 and CCRM 2018 that limits intervention to a judicial management proceeding to only secured creditors[11].
2. Second, the court recognize the nature of judicial management proceedings directly impacts the rights of all classes of creditors, not just secured creditors. Therefore, principle of justice requires the affected parties to be given opportunity to be heard[12].

11. In July 2025, the High Court case of Millennium Mall Sdn Bhd v Dato’ TS . HK. Mohd Zaidi Ilamdin (‘Millenium Mall Sdn Bhd’)[1] Justice Leong Wai Hong held that an unsecured creditor cannot intervene in a Judicial Management Proceeding on the grounds that: –

1. First, the Court is bound by the more recent decision of Desa Tiasa which does not allow unsecured creditors to intervene[14].
2. Second, Rule 13 CCRM 2018 is a specific subsidiary legislation to Judicial management application, must prevail over Order 15 Rule 6 ROC 2012 which is a general subsidiary legislation to the ROC 2012[15].
3. Third, the intervention application by the unsecured creditors is premature as the Court had not even granted the Judicial Management Order[16].

12. The conflicting position both in the Court of Appeal (Million Westlink and Desa Tiasa) and the High Court (Ace Holdings Sdn Bhd and Millenium Mall Sdn Bhd) would invariably lead to the issue remaining open until clarified by the Federal Court.

D. WHAT’S NEXT FOR UNSECURED CREDITORS – PROPER APPEAL IN THE FEDERAL COURT

13. On 29.07.2025[17], the Federal Court granted leave on the issue of law premised on the following questions:

1. Whether an unsecured creditor may intervene and be heard in Judicial Management Proceedings filed by another unsecured creditor pursuant to Section 405 CA 2016 read together with Rule 13 CCRM Rules 2018?
2. Whether an unsecured judgment creditor holding a not appealable final judgment may be heard in proceedings to appoint a judicial manager over a judgment debtor?
3. Whether Rule 13 CCRM Rules 2018 can be read to give preference to the rights of one unsecured creditor over the rights of another unsecured creditors?
4. Whether Rule 13 CCRM Rules 2018 prohibits the involvement of all unsecured creditors in Judicial Management Proceedings, regardless of whether said unsecured creditor is in support of or objects to said proceedings?

14. The Federal Court’s rulings on the above questions would provide clarity on this point of law. Ultimately, it is our view that a balance must be struck between an unsecured creditor’s right to oppose a judicial management application and a company’s right to rehabilitate its business without undue interference

[1] Definition under Insolvency Act 1967

[2] Maybank Investment Bank Berhad & Ors v Million Westlink Sdn Bhd (Civil Appeal No.: B-02(IM)-1590-08/2019

[3] Desa Tiasa Sdn Bhd v Bellajade Sdn Bhd & Anor (Civil Appeal No.: B-02(IM)-626-04/2023)

[4] Goldpage Assets Sdn Bhd v Unqiue Mix Sdn Bhd [2020] MLJU 723

[5] [2020] MLJU 723 – paragraph 22

[6] [2020] MLJU 723 – paragraph 22

[7] [2020] MLJU 723 – paragraph 24

[8] [2020] MLJU 723 – paragraph 38

[9] [2020] MLJU 723 – paragraph 39

[10] Ace Holdings Bhd (Amiliah bt Lathy Mohamed & Ors, interveners) [2025] MLJU 1812

[11] [2025] MLJU 1812 – paragraph 10

[12] [2025] MLJU 1812 – paragraph 14 and 16

[13] Millennium Mall Sdn Bhd v Dato’ TS . HK. Mohd Zaidi Ilamdin (Originating Summon No.: WA-28JM-34-12/2024)

[14] Paragraph 40 of the Grounds of Judgment

[15] Paragraph 44 of the Grounds of Judgment

[16] Paragraph 45 of the Grounds of Judgment

[17] Bellajade Sdn Bhd v Desa Tiasa Sdn Bhd & Ors (Civil Appeal No: 08(i)-6-01/2025(B))