In a recent Malaysian Court of Appeal case, Prolink Marketing Sdn Bhd v Ambank Islamic Bhd, the court opened the door for a debtor company to have one last opportunity to avoid winding up even after the pronouncement of a winding up order, albeit a conditional one.
The case involved Ambank obtaining a final judgment in excess of RM50 million against Prolink Marketing.
The latter failed to make payment, leading to the presentation of a winding-up petition by Ambank.
However, the High Court ordered that the winding up of the company would only be effective five months from the date of the order and subject to Prolink Marketing continuing to fail to make payment of the debt to Ambank before the said date.
In the Court of Appeal, it was found that the Court had the discretion to make any other order that it thinks fit, including granting a conditional winding-up order dependent on the payment of the debt owed within a stipulated time period.
The decision of Prolink Marketing is beneficial to a debtor as it would enable the company to obtain breathing space by gaining additional time to make payment of the debt instead of being wound up immediately.
Similarly, creditors would benefit as it would be more advantageous to obtain payment of the debt, even if slightly delayed, as opposed to being one of many creditors unsheathing their swords to draw blood from the hapless debtor through the winding-up process.
Summary:
A conditional winding up order was granted in Prolink Marketing Sdn Bhd v Ambank Islamic Bhd
The High Court compelled Ambank to return the sword temporarily
The Court of Appeal held that the phrase “any other order that the court thinks fit” was wide enough to confer discretion on the Court to make any order that it thinks fit • The decision is beneficial to both the debtor and the creditor
Creditors would obtain payment of debt even if slightly delayed
Debtors would obtain breathing space by gaining additional time to make payment
The decision would also be beneficial to the courts
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