A Singularis Approach to Cross-Border Insolvencies

[Originally published in Skrine Legal Insights Issue 1/2015]

The Privy Council in Singularis Holdings Ltd v Pricewaterhouse Coopers [2014] UKPC 36 (“Singularis”) has clarified the extent to which courts can render common law assistance for cross-border insolvencies.

In summary, there is a limited common law power to assist a liquidator appointed by a foreign court by ordering the production of information. Such information must be necessary for the administration of the foreign winding up and this power is only exercisable if the foreign court could have made such an equivalent order.

BACKGROUND: MODIFIED UNIVERSALISM

In a cross-border insolvency, courts may be faced with difficult questions. Should a domestic court apply its domestic laws as if the case had no international aspects or should a domestic court defer to the foreign laws of the main jurisdiction of incorporation of the wound up company?

In other words, should a ‘territorialist’ approach be applied where the domestic court only applies its domestic laws? Alternatively, should a ‘universalist’ approach prevail in allowing a single set of the foreign laws of the main winding up jurisdiction to govern all of the global winding up proceedings?

A middle ground between these two concepts is that of ‘modified universalism.’ The courts of all countries should cooperate, as far as possible, with the laws of the main jurisdiction, except where the domestic jurisdiction has a compelling reason to apply its domestic laws.

It is against this backdrop of the increasing recognition of modified universalism that the facts of Singularis are set out below.

BRIEF FACTS OF SINGULARIS

Singularis Holdings Limited (“Singularis”) had been wound up in its place of incorporation, the Cayman Islands. The liquidators of Singularis (“Liquidators”) obtained court orders in the Cayman Islands against the company’s former auditors, PricewaterhouseCoopers (“PwC”) in Bermuda, to deliver up to the Liquidators certain documents. This was in order to facilitate the Liquidators’ investigations to trace certain assets. However, the law of the Cayman Islands only provided for documents “belonging to” a company to be delivered up to a liquidator. There was no dispute that this would not include material belonging to PwC itself, principally their audit working papers.

Subsequently, in Bermuda, while there was no ancillary liquidation of Singularis, the Liquidators obtained an order from the Bermudan court recognising their status as liquidators. Where a company is wound up in Bermuda, Bermudan law had a wider provision where documents “relating to” a company are to be delivered up to the liquidator of the wound up company. Relying on this Bermudan provision, the Liquidators applied for a Bermudan court order for PwC to deliver up its audit working papers.

At first instance, the Bermudan court allowed the Liquidators’ application and relied on the principle of modified universalism. The Bermudan court exercised a common law power to order PwC to produce the same documents which they could have been ordered to produce under the relevant Bermudan provision.

PwC appealed the decision and on appeal, the Bermudan Court of Appeal set aside the first instance decision. The Liquidators appealed to the Privy Council.

PRIVY COUNCIL DECISION

The Privy Council, by a three to two majority decision,  dismissed the appeal on grounds that the Liquidators would not have had the power to require PwC to produce the documentation under the laws of the Liquidators’ main winding up jurisdiction i.e. Cayman Islands law. While the Privy Council was deciding on Bermuda law, the common law of Bermuda is the same as that of England.

The Privy Council had to consider two issues:

(1)    Whether a common law power existed to assist foreign liquidators by ordering parties to provide information in circumstances where the equivalent statutory power did not apply to foreign liquidators; and

(2)    Whether, if such a power existed, it should be exercised where an equivalent order could not have been made by the court in the main winding up proceedings.

Firstly, the Privy Council upheld the general principle of modified universalism as set out in the Privy Council case of Cambridge Gas Transport Corp v Navigator Holdings plc Creditors’ Committee [2006] UKPC 26 (“Cambridge Gas”). At common law, the Court has power to recognise and grant assistance to foreign insolvency proceedings. However, the Privy Council overruled some of the other wider principles set out in Cambridge Gas and held that a domestic court does not have the common law power to assist the foreign court by doing whatever it could have done in a domestic insolvency.

In dealing with the issues in the appeal, the majority decision held that there is a common law power to assist a foreign insolvency court by ordering the production of information, whether oral or documentary, which is necessary for the administration of a foreign winding up.

However, this common law power is subject to the following five limitations:

(i)    It is only available to assist the officers of a foreign insolvency court. It would not be available, for example, to assist a voluntary winding up, which is essentially a private arrangement and is not conducted by or on behalf of an officer of the court.

(ii)    It is a power of assistance and exists to enable courts to surmount the problems posed for a world-wide winding up of the company’s affairs. It is therefore not available to enable foreign liquidators to do something which they could not do under the law by which they were appointed.

(iii)    It is available only when it is necessary for the performance of the office-holder’s functions.

(iv)    Such an order must be consistent with the substantive law and public policy of the assisting domestic court, in this case that of Bermuda. Following from this, it is not available to exercise such a common law power to obtain material for use in actual or anticipated litigation. Further, in some jurisdictions, it may be contrary to domestic public policy to make an order which there would be no power to make in a domestic insolvency.

(v)    The exercise of this power is conditional on the applicant being prepared to pay the third party’s reasonable costs of compliance.

Therefore, the Bermuda court had both the right and the duty to assist the Cayman court in so far as it properly could within the limits of its own inherent powers. This was to enable the officers of the Cayman court to do in Bermuda that which they could do in the Cayman Islands.

However, the Bermuda court could not exercise a common law power which was not exercisable by the Cayman court and could not apply the legislation applicable to its domestic winding up by analogy ‘as if’ the Cayman winding up was a domestic (i.e. Bermudan) winding up. It was not a proper use of the Bermuda court’s common law power of assistance for it to purport to use a power analogous to the Bermudan statutory provision to compel disclosure and production of information which belonged to PwC rather than the company.

LOCAL APPLICATION

In Malaysia, the Privy Council decision would not be binding but would be persuasive. Where a foreign company is wound up by the court of its main jurisdiction, and there is no ancillary winding up in Malaysia, the foreign liquidator would likely be able to obtain a Malaysian order recognising its status as a liquidator and possibly obtain an order for the production of information which is necessary for the administration of the foreign winding up.

Similarly, a local court-appointed liquidator of a Malaysian company with worldwide links may also apply for such orders for production of information in other common law jurisdictions.

It appears that this broad principle of allowing a production of information, both oral and documentary, would allow a foreign liquidator to also apply for orders allowing for private or public examination of persons in connection with the affairs of the company in winding up (assuming that there are such equivalent provisions in the foreign liquidator’s main jurisdiction).

Decades ago, the Singapore High Court in Re China Underwriters Life and General Insurance Co Ltd [1988] 1 MLJ 409 held that the court had no inherent jurisdiction or power to order the private or public examination of persons and dismissed the Hong Kong liquidator’s application. It was recognised in that case that such a power of examination was an extraordinary one which invoked images of the Inquisition and of the Court of Star Chamber. This decision was upheld by the Singapore Court of Appeal in Official Receiver of Hongkong v Kao Wei Tseng & Ors [1990] 2 MLJ 321. At that time, it was held that it was only a statutory power available in a domestic winding up.

As a result of Singularis, we may now have a broadening of the courts’ power in Malaysia to assist foreign court-appointed liquidators.

Committal: Prima Facie Case Test and of Last Resort

Justice Wong Kian Kheong’s Grounds of Judgment in the case of Tan Kang Ho v Mao Sheng Marketing (M) Sdn Bhd provides a useful summary of the typical issues and challenges raised in a committal application. I have shared some tips about making a committal application earlier as well.

The Case of Tan Kang Ho

In summary, this case involved a consent Order allowing one of the party’s appointed auditor to inspect and to take photocopies of accounts of the company. This is the Order that triggered the subsequent committal application. This Order arguably had vague terms, it did not have a proper sealed penal indorsement, it did not provide for any time limit for the carrying out of any act, and the Order had not been served personally on the alleged contemnors. All of these were upheld as the procedural defects going towards the dismissal of the committal application.

This case also usefully sets out two points.

Firstly, what is the threshold to be met for leave for committal to be granted? Committal proceedings are a two-stage process. The first stage is to apply ex parte for leave to commence committal proceedings. At this stage, the case law sets out that a prima facie case for contempt has to be made out. The Court noted that there did not appear to be any Malaysian decision setting out what is the threshold for such a prima facie case. The Court’s view was that this prima facie case is met where:

  1. The Statement and Affidavit Verifying show that the alleged contemnor has committed a specie of contempt of court e.g. breaching a Court Order or having scandalised the Court.
  2. The contents of the Affidavit should not be inherently improbable.
  3. The standard of proof at the leave stage is not beyond a reasonable doubt. The Court should keep an open mind and not make any finding of fact.

Secondly, this case also reiterated that committal should only be used as a last resort. The Court did take into account alternative remedies open to the applicant. In this case, for example, the Court was of the view that complaints could be lodged with the Companies Commission of Malaysia for it to investigate into any breaches.

Conclusion

In conclusion, my view is that Courts can afford to be extra vigilant in committal proceedings, even at the leave stage. Committal proceedings are quasi-criminal in nature and with the real possibility of imprisonment if there is a finding of contempt. One of the side effects of there being an Order allowing leave for committal is that the alleged contemnors must then first purge their contempt. The alleged contemnors will find it difficult to continue with their own applications and must first oppose the committal application.

Where a party applies for leave for committal (and the Rules of Court 2012 sets out that this is done ex parte), then the general duty to make full and frank disclosure should oblige the applicant to highlight the possible procedural problems in the committal application. So for example, here, where the consent Order did have procedural weaknesses for the purposes of making a committal application. At the ex parte leave stage, the Court could also query an applicant on any of such issues and to also query whether there were alternative remedies open.

Time can be Extended for Affidavits in Winding Up

In winding up proceedings, the Companies (Winding-up) Rules 1972 provide for strict timelines for the filing of the affidavits. Rule 30 provides that the affidavit in opposition to the Petition shall be filed and served at least 7 days before the hearing of the Petition. In turn, the Petitioner’s affidavit in reply to the affidavit in opposition shall be filed and served within 3 days of the date of service of the affidavit in opposition. This makes the timeline very tight, especially for the Petitioner’s affidavit in reply.

Since the Court of Appeal decision in Crocuses & Daffodils (M) Sdn Bhd v Development & Commercial Bank Bhd [1997] 2 MLJ 756, there has been a line of authorities which has applied these timelines strictly. This is due to the use of the word “shall” in the Rule 30.

Court of Appeal decision in Kilo Asset

In the recent unreported grounds of judgment in Hiew Tai Hong v Kilo Asset Sdn Bhd, the Court of Appeal had to consider the issue as to whether there could be an extension of time to allow for the late filing of the various affidavits in a winding up Petition. In this case, the winding up petition involved a shareholder dispute where the petition relied largely on the just and equitable grounds. Extensive facts and the history between the shareholders were set out in the petition. This was not a case where the petition was based on an inability to pay debt and where a creditor was petitioning for winding up.

While the affidavits in opposition by the respondent were filed in time, the Petitioner filed his three affidavits in reply well past the 3-day timeline as set out in Rule 30. The Respondent then filed further affidavits in opposition.  Presumably because of an objection raised on the late filing of the affidavits in reply, the Petitioner filed an application for an extension of time. This application was based on Rule 193 which allows for enlargement or abridgment of time and Rule 194 which provides that no proceedings shall be invalidated by any formal defect or any irregularity unless the Court views that substantial injustice has been caused.

The High Court Judge dismissed the Petitioner’s extension of time application and therefore disregarded the Petitioner’s affidavits in reply. As the High Court Judge viewed that the Respondent’s affidavits in opposition was therefore left unanswered, the Petition was dismissed.

On appeal, the Court of Appeal allowed the extension of time and ordered that the Petition be remitted back to the High Court for a full hearing. Firstly, the Court of Appeal was guided by the wordings of Rules 193 and 194 which would allow for an extension of time. These Rules were not referred to in the judgment of Crocuses & Daffodils. This is consistent with the current approach of the Courts to have regard to the justice of the case and not only to the technical non-compliance.

Secondly, the Court of Appeal also made a distinction between the present just and equitable winding up Petition and a Petition based on an inability to pay a debt (the latter being the Petition in Crocuses & Daffodils). In a just and equitable winding up Petition, involving a dispute among the shareholders and allegations against the directors, it is common for the facts to be hotly disputed and  where there is the possibility of cross-examination of deponents as well. Therefore, it would not be possible for the Court to adopt such a rigid approach to non-compliance.

Commentary

This decision is welcomed in taking a step away from a mechanical rigid approach for such affidavit timelines. Instead, the Court weighs up the justice of the case in deciding whether to allow for an extension of time or not. This is even more important in such a just and equitable winding up scenario where the facts are commonly disputed and where it is very common to have an extensive exchange of affidavits.

In practice, for a just and equitable winding up petition, the solicitors commonly agree among themselves for an extension of time for the filing and exchange of affidavits. It can be very difficult for the Petitioner to comply with the 3-day rule to file in the affidavit in reply. Rule 30 is also silent in allowing for the further filing of affidavits since no timeline is provided. This decision however appears to only apply in the context of such a Petition based on the just and equitable ground. A party seeking such an extension of time must still file in an application under Rules 193 and 194.

However, this decision does not go so far as to outright overrule the Crocuse & Daffodils approach in maintaining strict timelines for the inability to pay debt scenario. It can also be quite common to have a lengthy exchange of affidavits if the debt is heavily in dispute. Nonetheless, to prevent the risk of such a technical objection, all parties had best still comply strictly with the timelines set out in Rule 30.

 

 

Speaking in Kuching on the Companies Bill

I have been invited by CLJLaw to speak on 16 January 2015 at the Pullman Hotel, Kuching.The registration form is over here.

Due to the good response in KL the last time for the Companies Bill seminar, this will now be held over in Kuching.

 

companies

A lot of us are expecting the new Companies Bill to be tabled during the Parliamentary sitting in March 2015. The Bill and the changes it brings have been long-awaited.

The MAS Administration Act is Gazetted

I had earlier written about the Bill relating to Malaysia Airlines. As an update, the Bill has received Royal Assent on 30 December 2014 and Gazetted on 5 January 2015.

It is now known as the Malaysian Airline System Berhad (Administration) Act 2015. However, the Act will only come into operation on a date to be appointed by the Prime Minister by notification in the Gazette.

One particular significant change between the Act and the Bill has been the removal of certain powers of the Administrator. The Act has removed the provisions which originally allowed the Administrator to assume control over the property and business of a transition service provider and to carry on that business, if that transition service provider refused to provide such goods and services to the new MAB.

Such very wide powers have been dialed down such that if the transition service provider refuses, the new MAB and its subsidiary companies shall only have the right to recover any costs incurred or damage suffered.

Watch the Clock: Limitation Period for Enforcement of Arbitral Award

The Federal Court in Christopher Martin Boyd v Deb Brata Das Gupta [2014] 9 CLJ 887 resolved the issue as to the limitation period for the enforcement of an arbitral award (whether under the old Arbitration Act 1952 or the present Arbitration Act 2005). The Federal Court Grounds of Judgment are found here.

Briefly summarising the grounds, for an arbitral award, there are two different limitation periods applicable. The first is the 6-year time limit (under section 6(1)(c) of the Limitation Act 1953 (“Act”)) from the date of the arbitral award for the award to be registered or enforced as a Court Judgment. The arbitral award would then be deemed to be a Judgment from that date.

Thereafter, the second period is the 12-year time limit (under section 6(3) of the Act) from the date of that Judgment for any action to be taken based on that Judgment (e.g. execution proceedings or bankruptcy proceedings). Therefore, there could potentially be close to a total of 18 years for an arbitral award to be eventually executed on. There is the first 6-year period to obtain the Court Order enforcing the award as a Judgment and thereafter, the second 12-year period for legal actions to be taken based on the Judgment.

 

 

Insolvency and Arbitration: Will a winding up petition be stayed in favour of arbitration?

I am just setting out my thoughts and where I will be planning to write a more extensive article on this area. I have always been fascinated on the interaction of the statutory process of winding up and the contractual bargain of arbitration. Will one process always necessarily trump the other?

There are now several cases which try to deal with whether there can be a form of a stay of the Court winding up proceedings in favour of arbitration. The winding up itself can arise from either a creditor petitioning on the grounds of insolvency or a shareholder petitioning on the just and equitable grounds. In the former scenario, the petition may be grounded on a debt arising from a contract containing an arbitration clause. In the latter, the shareholder’s complaints may be arising from a shareholders’ agreement with the other shareholders. I now just record down some cases in the scenario of a petition being presented by a creditor on the grounds of insolvency.

There is a recent English Court of Appeal decision in Salford Estates (No. 2) Limited v Altomart Limited [2014] EWCA 1575 Civ  which held that the mandatory stay provisions in the English Arbitration Act would not apply to stay winding up proceedings. Instead, the Companies Court would exercise its usual discretion in whether to stay or dismiss a winding up petition, for example, if there was a bona fide dispute of the debt on substantial grounds.

This is a similar approach taken in Hong Kong, where its Arbitration Ordinance closely follows the Model Law (and therefore, may be more persuasive in Malaysia). The case of Jade Union Investment Limited [2004] HKCFI 21 also similarly held that the mere existence of an arbitration clause does not mean that the mandatory stay provisions under the Arbitration Ordinance would apply. The Court would still apply the test as to whether there was a bona fide dispute of debt when hearing the petition. Another case of Re Sinom (Hong Kong) Ltd [2009] HKCFI 2201 similarly followed Jade Union when deciding whether to grant an injunction to restrain the presentation of a petition.

It will be interesting to see how such a situation would play out in Malaysia. I am not aware of any such case involving a stay of a winding up petition or an injunction to restrain presentation based on the Arbitration Act 2005 (“AA”). I know of one or two cases under the old Arbitration Act 1952 where a stay of winding up proceedings was sometimes granted and sometimes not.

If there is an arbitration clause in a contract and a statutory demand is made for payment under the contract, would the other contracting party be able to apply under section 11 of the AA for an injunction to restrain the presentation of the petition? What would the test for such an injunction be? Would it still be the Tan Kok Tong Court of Appeal test of a bona fide dispute of debt on substantial grounds? Or would the mere existence of an arbitration clause be sufficient? Or would an application for an injunction have to be grounded outside of the AA and the Court would exercise its inherent jurisdiction to grant a Fortuna injunction to restrain the presentation?

If the Petition was filed, would a stay of those Court proceedings be allowed under section 10 of the AA? The test for a stay under section 10 of the AA will not require the Court to decide on whether there is a bona fide dispute (that original provision has been taken out) and it is almost mandatory for a stay unless the arbitration clause can be questioned (e.g. the clause is null and void or inoperative).

I will try to deal with these questions in my more extensive article and after I have done more research.

The Repetitive Restraining Orders

Background and History to the Restraining Order

Under the scheme of arrangement framework, the Court can grant a restraining order under section 176(10) of the Companies Act 1965 (“Act”) to restrain further proceedings in any action against the company undertaking a proposed scheme. This allows the financially distressed company to have a moratorium and have breathing space from creditor action, while the company attempts to restructure or compromise its debts. Ordinarily, it would be the company itself which would apply for a restraining order but section 176(10) of the Act allows any member or creditor of the company to also make such an application. I had earlier written a general overview on the law of schemes of arrangement.

iStockOpenHandcuff-362x270

The restraining order would have to strike a balance between different interests. On the one hand, a moratorium may be beneficial to the overall pool of creditors in order to prevent the scramble by creditors to execute against the distressed company’s assets. The restraining order could therefore facilitate the orderly restructuring of the debts where there was a genuine and viable scheme proposal. On the other hand, a wide stay of legal proceedings could also be abused. A company could sit on a restraining order, without any viable scheme proposal, and frustrate the actions by the creditors.

The potential for the abuse of the restraining order may have led to the amendment to our Act in late 1998 to tighten up the use of restraining orders. Additional restrictions and creditor-protection provisions were built in through the introduction of sections 176(10A) – (10G) of the Act. Essentially, it limited the grant of each restraining order to prima facie not more than 90 days with certain mandatory requirements to be met. Further, once the restraining order was granted, there could not be the disposition of any property of the company outside the ordinary course of business.

A recent case highlighted a situation where there could be the repeated use of a restraining order. That might delay legal proceedings by creditors but it may also be a lifeline for an ailing company, if there was a viable scheme proposal.

The Repeated Use of a Restraining Order

In the unreported case of Dynawell Corporation (M) Sdn Bhd (in provisional liquidation) v Universal Trustee (M) Berhad (Seremban High Court Originating Summons NCVC-24M-63-06-2013) (see [2013] 1 LNS 1391), the High Court was made aware of multiple applications for a restraining order and made a finding that the application for a restraining order was mala fide. Dynawell can also be read together with the related High Court decision in RHB Bank Berhad v Gula Perak Berhad [2013] 1 LNS 1409. From a reading of both the cases, the brief facts appear to be as follows.

Gula Perak Berhad was listed on the stock exchange and in May 2010, it was classified as a PN17 company. It was eventually de-listed in May 2011. In turn, Dynawell is a wholly-owned subsidiary of Gula Perak Berhad and where its core asset is the Dynasty Hotel. Several secured lenders initiated legal proceedings against both Gula Perak and Dynawell, including foreclosure proceedings on the Dynasty Hotel. Winding up proceedings were also taken against Gula Perak and Dynawell and where both companies had Provisional Liquidators appointed over them.

circle

During the course of these legal proceedings, there appeared to be at least 6 different applications filed in different Courts seeking for a restraining order on the basis of a proposed scheme of arrangement. Applications were filed in Kuala Lumpur, Shah Alam, Seremban and Taiping. There were different applicants, some may have been creditors or members of Gula Perak/Dynawell or in the Dynawell case, it was Dynawell itself. It was noted in the Dynawell judgment that the proposed schemes of arrangement applications had similar grounds and traits and where the averments in the affidavit in support were largely the same. Justice Zabariah Yusof remarked that this indicated that it originated from the same source or author.

Procedurally, an application for such a restraining order would ordinarily be taken out ex parte. This is because  only the Applicant would need to apply and need not necessarily add in any other party, or to add in any of the other creditors with pending legal proceedings for instance. Once the initial restraining order is granted ex parte, and this should only be for a limited time not exceeding 90 days, it will then have a universal effect in restraining all legal proceedings by all the creditors listed in the proposed scheme. The onus then shifts to the opposing creditors to intervene and to attempt to set aside the restraining order or to oppose the extension of the restraining order.

Hence, the two judgments show that the opposing creditors had to go to each of the different Courts to apply to set aside the restraining orders obtained by different parties. The restraining orders and the related legal proceedings also delayed the foreclosure and the winding up proceedings.

The history of the litigation then led to the High Court in Taiping and in Seremban making orders that any further application for a restraining order be made inter partes and for such an application to be advertised in 3 newspapers.

Justice Zabariah Yusof made the following critical remarks:

“In view of the circumstances and the time line of the ex parte Originating Summons in Enclosure 2 filed, clearly shows the mala fide intent of Dynawell to conceal the application from UTB and at the same time concealing the material and relevant facts from the court.

Section 176(1) of the Companies Act does not state that an RO application may be made ex parte. It merely states that a party may apply. However, given the chequered history of Dynawell, the propose (sic) scheme of arrangements and the ROs applications which have been explained above, this is a case of abuse of process of the highest order. I would be failing in my duty if I do not invoke my inherent jurisdiction to curb further abuse by Dynawell.”

Costs of the setting aside of the restraining order were then made personally against the director of Dynawell.

Conclusion

A restraining order is usually a useful and often crucial mechanism to achieve a viable restructuring. However, this case shows how the repeated use of a restraining order could amount to an abuse of process. The present provisions in the Act, and the impending amendments to the Act, will not address this potential for abuse. An application for a restraining order can continue to be taken out ex parte, and where an applicant may still attempt to bypass the mandatory protection laid in the section 176(10A) requirements. Any creditor or member of the company could potentially also apply for a restraining order, thereby resulting in multiple and parallel restraining orders. The protection against any abuse of process therefore rests on the vigilance of the Courts when hearing such ex parte applications.

Moving the Call of Carmen Tham: A Tale of Two Vocations

In Malaysia, the admission to the Malaysian Bar is known as the Call to the Bar. It marks a pupil’s qualification as an Advocate & Solicitor. A member of the Bar with more than 7 years of experience will move the pupil’s Call, and to submit on behalf of the pupil as to why the pupil now qualifies to be admitted to the Bar. I can do no better than to refer to Fahri Azzat’s LoyarBurok article if you want to read more about the significance of the Mover and the Call to the Bar.

Other jurisdictions have started to move to a form of a mass Call and they do away with individual ‘submissions’ and speeches by the Mover. I think it is still a fine tradition to maintain here, despite the length of time taken. It is a delicate balance, with the increasing number of pupils being admitted to the Bar, and with judicial time being taken away.

On a personal note, I always get nervous when I have to move a pupil’s Call. Firstly, I recognise that this is a once-in-a-lifetime experience to get Called to the Malaysian Bar. Secondly, it is also not very often that we get a chance to publicly address and thank our loved ones, in particular to express our gratitude to our parents. With all these factors, I always get nervous in wanting to give the best speech that I can. Most times, I will try to write the speech from scratch, having had a chance to meet up with the pupil for a chat.

There was added pressure on this occasion since I was moving the call of a LoyarBurokker who is a pupil of another fellow LoyarBurokker. As the main theme of this speech, I wanted to focus on the term “vocation” since I thought it was very apt in describing Carmen’s future.

 

With leave My Lady,

I am Lee Shih for the Petitioner. My learned friends for the Attorney-General Chambers, the Bar Council and the Kuala Lumpur Bar Committee have been introduced earlier.

With leave My Lady, allow me to introduce the Petitioner.

The Petitioner was born on 6 November 1989. She is the eldest child of Mr Tham Kam See and Madam Chan Soo Kum. The Petitioner’s father cannot be in Court today but the Petitioner’s mother and sister are present in Court.

My Lady, the Petitioner read law at Aberystwyth University in Wales and graduated in 2010. She completed her Bar Professional Training Course at City University, London, and she was called to the English Bar at the Honourable Society of Inner Temple.

The Petitioner then completed her pupillage under my learned friend, Marcus van Geyzel, of Peter Ling & van Geyzel.

At the Petitioner’s Call to the Bar today, I think it is apt to draw our attention to the term “vocation.” Vocation is derived from the Latin word meaning “to call.” Hence, I find it very accurate to describe the legal profession as a vocation. Being members of the legal profession, we answer the call to serve others.

Now, having completed her 9-month journey as a pupil, the Petitioner is about mark her entry into this vocation of the legal profession.

In addition, the Petitioner is also about to complete another significant 9-month journey. Soon, the Petitioner will mark her entry into another vocation; the vocation of motherhood.

Both vocations will be a lifetime journey for the Petitioner. They will be filled with some challenges, but I have no doubt that both will bring her much pride and happiness.

On this day, the Petitioner would like to take this opportunity to thank the following:

1. Firstly, her parents, Mr Tham Kam See and Madam Chan Soo Kum, for having sacrificed so much for her. In my conversation with the Petitioner, the Petitioner described her father as loving but stern, and who instilled a lot of discipline in the Petitioner. Mr Tham, the sole breadwinner in the family, through his hard work provided her with the best education that she could ever ask for. Madam Chan, on the other hand, provided the whole family with delicious meals every day. A dish is never repeated, and Madam Chan would have drawers after drawers filled with recipe books. Madam Chan’s cooking would be the impetus to draw all the family members back home to have dinner together.

2. To her spouse, Mr Clinton Wong, for being her pillar of strength and for his unconditional care and love throughout Bar school and pupillage.

3. To her colleagues, former colleagues and bosses in Peter Ling & van Geyzel, particularly Li Ying and Jin for making her pupillage experience rewarding, unforgettable and fun.

4. To her pupil master, Marcus van Geyzel, who, in her words, is the coolest pupil master ever and also a very good friend who has imparted on her great knowledge and wisdom. As I have known the Petitioner’s pupil master for years now, I have no doubt that he would have bestowed some of his wealth of sartorial sense on to the Petitioner as well.

5. Finally, the Petitioner would like to thank her friends who took the time and effort to be present here today to witness this special occasion.

My Lady, I believe that the Petitioner’s papers are in order and that the relevant bodies have no objections. I humbly pray that the Petitioner be admitted and enrolled as an Advocate and Solicitor of this Honourable Court.

I seek leave from this Honourable Court for my learned friend, Marcus van Geyzel, to robe the Petitioner.

Call

The MAS Administration Bill: Malaysia Airlines to Soar Again?

This is my article originally published on LoyarBurok and then picked up by The Malay Mail.

malaysia-airlines-logo

As part of the massive restructuring plans for Malaysia Airlines (MAS), the Malaysian Airline System Berhad (Administration) Bill 2014 was tabled before Parliament on 26 November 2014.

As a general overview, I will just touch on some of the interesting aspects of this Bill.

  1. A new entity, the similar-sounding Malaysia Airlines Berhad (MAB), will be incorporated under the Companies Act 1965.
  2. The Bill proposes for its provisions to apply for 5 years or upon the successful listing of the shares of MAB on the official list of Bursa Malaysia, whichever is earlier.
  3. It appears that MAS and its subsidiaries listed in the Bill may be placed under administration. Malaysia does not have a formal administration regime like in the UK but this is the mechanism referred to in the Bill. It effectively allows MAS and its subsidiaries to be placed under the management and control of an Administrator, and the Administrator will, among others, have the powers to manage the business and operations, manage the assets, assume all the powers of management, and to make any arrangement or compromise.
  4. An Administrator need not hold a liquidator license but merely needs to be an approved company auditor (as under the Companies Act 1965) and one who is, in the opinion of the appointer, capable of performing the duties of an administrator.
  5. Upon the appointment of the Administrator over any of the listed companies, a very wide moratorium will apply. This will essentially prevent any form of legal proceedings to be taken against MAS and its subsidiaries. The moratorium will apply for a period of 12 months, unless the administration is terminated. The 12-month moratorium can be extended by the Minister.
  6. Undue preference would apply on the appointment of the Administrator and with the effective date being the date of the coming into force of the eventual Act. This could pose difficulties and uncertainty for the creditors  of the MAS companies, with a possible clawback period of 6 months before the coming into force of the Act.
  7. Interestingly, there is some scope to ‘cherry-pick’ the assets or liabilities to be transferred into the new MAB entity and to leave other assets or liabilities behind. This will be carried out through a vesting order under the eventual Act. The Administrator has the power to re-negotiate existing contracts of the MAS companies.
  8. Further, MAB has the sole discretion to offer employment to the employees of the MAS companies, on the terms and conditions as MAB may determine. It is made very clear that MAB is not deemed to be a successor employer in any way. This allows MAB to make a very clean break from the MAS employment contracts. There is also a specific provision to deal with MAB negotiating with trade unions and associations.
  9. There can be no Court Orders which stays, restrains or affects the powers of the Administrator or which compels the Administrator to do or perform any act.

The provisions of the Bill appear to be very specific in targeting some of the possible issues that MAS faces in its restructuring. As part of its restructuring, MAS may find that it needs to extricate itself from certain commercial contracts and employment contracts. The Bill will provide the Administrator with very wide powers and with a wide array of options in attempting to restructure MAS. Nonetheless, a balance must be struck in protecting the MAS creditors’ and employees’ interests.

Hopefully, the new entity of MAB will be able to take flight, like a phoenix soaring up again. Nonetheless, a balance must be struck in order to protect the interests of the MAS creditors and employees.