On 16.02.2023, our Tai Wei Jeat and Maxine Lim successfully resisted an application by a creditor to set aside an order sanctioning a scheme of arrangement under Section 366 of the Companies Act 2016 (“Sanction Order”).

At the hearing, the arguments centered around whether the High Court had jurisdiction to set aside the Sanction Order that it had previously granted. The parties were in agreement that there appeared to be no reported decisions by the Malaysian Courts specifically dealing with this issue. Further, there is no express provision in the Companies Act 2016 dealing with the Court’s jurisdiction to set aside a sanction order. 

On behalf of our client, we contended that there was no reason why the general principle enunciated by the Federal Court in Badiaddin Bin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 1 MLJ 393 as well as Hock Hua Bank Bhd v Sahari bin Murid [1981] 1 MLJ 143, (i.e. a court may only vary or set aside a judgment and/or order regularly obtained in limited circumstances), should not apply to a sanction order pertaining to a scheme of arrangement. The position of the law in the United Kingdom, Australia and Singapore was also canvassed during the hearing.

After hearing submissions from counsel for both parties, the Court agreed with our contention that it lacked jurisdiction to set aside the Sanction Order. The Court accordingly dismissed the creditors’ application.