1
IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
ORIGINATING SUMMONS NO: 24NCC-444-12/2014
In the matter of High-5 Conglomerate
Berhad, High-5 Confectionery Sdn Bhd and
High-5 Marketing Sdn. Bhd.
And
In the matter of the Proposed Schemes of
Arrangement between the Applicants and their respective scheme creditors
And
In the matter of Section 176(1) of the
Companies Act 1965
And
In the matter of Order 88 of the Rules of the
Court 2012
1.HIGH-5 CONGLOMERATE BERHAD
2.HIGH-5 CONFECTIONERY SDN. BHD.
3.HIGH-5 MARKETING SDN. BHD.
JUDGMENT
Introduction
.... APPLICANTS
The Restraining Order (RO)
[1] The RO in Originating Summons (OS) No. 24NCC-280-08/2012 was granted on 14.8.2012
and extended (on an ex-parte basis) a total of 9 times. The RO in OS No. 24NCC-134-04/2012 was granted on 12.4.2012
and extended (on an ex-parte basis) a

2 total of 7 times. By an order of the Court dated on 30.12.2013,
OS No.24NCC-134-04/2012 was transferred and consolidated with
OS No. 24NCC-280-08/2012. On 3.7.2014 in the consolidated proceedings, the RO was extended for a further period of 180 days expiring on 3.1.2015. The RO was subsequently extended until 3.3.2015 to facilitate the filing of the Affidavits by the parties intending to contest the RO (OS No.24NCC-444-12/2014). The said RO has been in place for almost 2 years and 7 months.
[2] By an order dated 28.2.2014, CIMB was granted leave to intervene and was added as a Respondent in the consolidated proceedings (OS No. 24NCC-280-08/2012 and OS No. 24NCC-134-
04/2012). The Applicants did not object to the said application.
[3] Enclosure 96 of OS No. 24NCC-280-08/2012 and consolidated with OS No. 24NCC-134-04/2012 is the Applicants’ application to extend the Restraining Order (RO) that expired on 3.3.2015 pursuant to section 176(10A) Companies Act 1965 (CA),
(i) That the Order dated 14.8.2012 vide Kuala Lumpur
Originating Summons No. 24NCC-280-08/2012 and the
Order dated 12.4.2012 vide Kuala Lumpur Summons
No.: 24NCC-134-04/2012 restraining any and all proceedings and/or actions and/or further proceedings in any suits and/or proceedings and/or actions against each of the Applicants and/or in respect of each of the
Applicants and/or its assets and/or assets employed in its business, including without limitation any winding-up, execution, arbitration proceedings, act of repossession

3 or purported repossession, the appointment of receivers and managers, liquidators, provisional liquidators or otherwise whatsoever, by any creditors and/or purported creditors or any other persons whatsoever, except by leave of this Honourable Court, be further extended for ninety (90) days from 4.1.2015;
(ii) That notice of the extension of the said RO be advertised once in The News Straits Times and Berita Harian newspapers, and the restraining orders as extended herein be deemed to have been duly served on any creditors and/or purported creditors or any other persons whatsoever on the day immediately following the day on which the advertisements of the notice of the extension of the said RO in the News Straits Times and Berita
Harian newspapers are published, whichever is published first; and
(iii) That the Applicants be given liberty to apply to this
Honourable Court for such further orders and/or reliefs as the Applicants deem fit and/or just.
[4] High-5 Conglomerate Berhad, High-5 Confectionery Sdn. Bhd. and High-5 Marketing Sdn. Bhd. (‘the High-5 Group’) in suit
No.24NCC-444-12/2014 filed an application for leave pursuant to section 176(1) to convene 3 separate creditors’ meeting in respect of 3 proposed schemes of arrangements for each of the Applicants
(Enclosure 1).

4
[5] The Applicants are seeking concurrent orders under section
176(10A) CA to extend the RO and to convene a creditors’ meeting to consider the Proposed Scheme.
The Grounds
[6] The grounds for the application are as follows:
(i) Since the grant of the order on 3.7.2014 extending the
RO, developments have transpired resulting in High-5
Conglomerate Berhad being de-listed from the Official
List of Bursa Securities on 24.10.2014.
(ii) Notwithstanding the said de-listing, the Applicants have continued efforts to formulate a corporate and debt restructuring of the Applicants to, inter alia, address settlement of their debts wherein the Applicants now intend to implement a proposed corporate and debt restructuring exercise (“PCDRS”) which includes, amongst others, proposed scheme of arrangement to be implemented under section 176 of the CA for the unsecured creditors of each of the Applicants (“PSOA”).
(iii) The extension of the RO sought herein are just, necessary, expedient and relevant to facilities a smooth and expeditious conclusion to the process of progressing the PCDRS and the PSOA, without interference or threats of legal actions by any parties whatsoever.

5
[7] Enclosure 1 of OS No.24NCC-44412/2014 is the Applicants’ application for leave pursuant to section 176(1) CA to convene 3 sep arate creditors’ meeting in respect of 3 proposed schemes of arrangements for each of the Applicants,
“Each of the 1 st , 2 nd and 3 rd Applicants herein be at liberty within three (3) months from the grant of the Order sought herein to each convene a meeting with their respective Scheme
Creditors (as defined in the affidavit in support affirmed by
Dato’ Gan Miew Chee @ Gan Khuan Poh on 10.12.2014)
(“Court Convened Meeting(s)”) at such venue and on such date(s) and time(s) as will be notified in writing to the Scheme
Creditors by the 1 st , 2 nd and 3 rd Applicants respectively for the purpose of considering and if thought fit, approving, with or without modification, the respective proposed schemes of arrangement for the Scheme Creditors (“PSOA”).”.
The Affidavits
[8] For the purposes of the application, all the prior affidavits filed in the consolidated proceedings are referred to in addition to the Affidavit in support to Enclosure 96 (Enclosure 97) of the consolidated matter and Affidavit in Support to Enclosure 1 of OS
No. 24NCC-444-12/2014.
Enclosure 96 of No.24NCC-280-08/2012 consolidated with OS
No. 24NCC-134-04/2012 and Enclosure 1 of OS No.24NCC-444-
12/2014
[9] By consent of all parties, Enclosure 96 and Enclosure 1 were heard together as the facts and the law applicable are similar so

6 as to save time, costs and effort. This is my grounds of judgment for dismissing the application for extension of the RO (Enclosure 96) and also dismissing the application for leave to convene creditors’ meeting (Enclosure 1).
Background Facts
[10] Silver Bird Group Bhd. was incorporated as a private limited company on 5.10.1993 under the name of Madeleine Bakery Café
Sdn. Bhd. It subsequently changed its name to Silver Bird Group
Sdn. Bhd. on 21.8.1998, and on 3.3.1999 it changed its name again to Silver Bird Group Bhd. (SBGB). It was then converted to a public company on 21.8.2000 and listed on the then Second
Board of Bursa Malaysia on 14.6.2002. Subsequently, on 3.3.2003 it was transferred to the then Main Board of Bursa Malaysia.
[11] Standard Confectionery Sdn. Bhd. (SCSB) was incorporated on 4.10.1986. SCSB is a wholly owned subsidiary of SBGB.
[12] SBGB is principally engaged in the business of manufacturing, selling and distributing consumer foods including bread and bakery goods through its operating subsidiaries as well as an investment holding company providing management services to its subsidiaries.
The manufacturing aspects of SBGB ’s business are conducted through SCSB.
[13] On 24.2.2012, SBGB announced to Bursa Malaysia that it would not be able to issue its annual audited financial statements for the financial year ended 31.10.2011 within 4 months from

7 the close of the financial year ending 31.10.2011 pursuant to paragraph 9.23(2) of Bursa Malaysia’s Main Market Listing
Requirements as SBGB needed more time to resolve audit queries raised by its auditors on 22.2.2012.
[14] On 29.2.2012, SBGB announced to Bursa Malaysia,
(i) the suspension of its Group Managing Directors, Dato’
Tan Han Kook, Executive Director, Mr. Ching Siew
Chong and the General Manager – Accounts & Finance,
Ms. Lai Poh Mei from work with effect from 24.2.2012 to facilitate the conduct of an internal enquiry into allegations of, inter alia , irregularities in the company’s accounts;
(ii) the formation of a Special Committee comprising
5 Non-Executive Directors of SBGB, ( “the Special
Committee”) to inter alia , oversee the operations of
SBGB and its subsidiaries (“the Silver Bird Group”); and
(iii) the appointment of PKF Advisory Sdn. Bhd. (“PKF”) as the forensic accountants to conduct a forensic review into the affairs of SBGB.
[15] SBGB issued its annual audited financial statements for the financial year ending 31.10.2011 in which SBGB’s auditors had expressed a disclaimer of opinion on SBGB’s said annual audited financial statements. It also announced that certain of its

8 subsidiaries, were in default of their banking facilities repayments to their lenders.
[16] By a general announcement to Bursa Malaysia, SBGB announced that by reason of its auditors having expressed a disclaimer of opinion on the latest annual audited accounts and the default in payment by certain of its subsidiaries as announced pursuant to Bursa Ma laysia’s Practice Note 1 (PN 1) and SBGB being unable to provide a solvency declaration, SBGB is an affected listed issuer pursuant to Bursa Malaysia’s Practice Note 17 (PN17).
[17] SBGB is now known as High-5 Conglomerate Berhad
(HCB). SCSB is now known as High-5 Confectionery Sdn. Bhd. and
Stanson Marketing Sdn. Bhd. is now known as High-5 Marketing
Sdn. Bhd.. Both are private limited companies wholly owned by
HCB as its subsidiaries.
[18] SMSB and HCB together with SCSB had on 12.4.2012 and
14.8.2012 respectively instituted separate proceedings by way of
Kuala Lumpur Originating Summons No: 24NCC-134-04/2012 and 24NCC-280-08/2012 pursuant to section 176(10) of the CA to obtain restraining orders, inter alia , to restrain any and all proceedings and/or actions and/or further proceedings in any suits and/or proceedings and/or actions against the Applicants and/ or in respect of the Applicants and/or its assets and/or assets employed in its business, including without limitation any winding- up, execution, arbitration proceedings, act of repossession or purported repossession, the appointment of receivers and managers,

9 liquidators, provisional liquidators or otherwise whatsoever, by any creditors and/or purported creditors or any other persons identified therein except by leave of Court.
[19] On 6.8.2014, Bursa Securities rejected the Announced 3 rd
Proposed Regularisation Plan (PRP) and informed that the securities of High-5 would be de-listed unless an appeal against the rejection of the Announced 3 rd PRP and de-listing was submitted on or before
5.9.2014.
[20] HCB had on 5.9.2014, through Inter-Pacific, submitted an appeal to Bursa Securities against Bursa Securi ties’ rejection of the Announced 3 rd PRP. However, on 20.10.2014, the Listing
Committee of Bursa Securities dismissed HCB Appeal.
[21] As a result of the dismissal of HCB’s appeal, Bursa Securities commenced de-listing procedures which resulted in HCB being de-listed from the Official List of Bursa Securities on 24.10.2014.
[22] CIMB Islamic Trustee Berhad (“CIMB”) is the owner of the property held under HS(D) 232293, PT 93, Pekan Baru
Hicom, District of Petaling, State of Selangor Darul Ehsan (formerly
Geran 64178, Lot 62003, Pekan Baru Hicom, District of Petaling,
State of Selangor Darul Ehsan and the buildings erected thereon
(“Property”) since 26.9.2007.
[23] The 1 st Applicant (“High-5”) in Enclosure 1 of OS NCC24-444-
12/2014 carries out its business operation on the Property. The

10 lease upon which High-5 was allowed to remain on the Property had lapsed on 15.8.2013. High-5 has however refused to vacate the Property and to pay any lease rental. The lease rental is
RM608,000.00 per month. The outstanding rental to date is at least
RM10,336,000.00 (not inclusive of double rental).
[24] On or around 17.10.2014, High-5 and its subsidiary,
Standard Confectionery Sdn. Bhd. (now known as High-5
Confectionery Sdn. Bhd.) had filed the Kuala Lumpur High Court
Suit No. 22NCVC-476-10/2014 (‘the 2014 suit’) against Amanah
Raya Berhad (ARB), CIMB, and 2 others seeking to inter alia , void and annul CIMB’s title to the Property and the Lease
Agreement.
[25] On 28.10.2014, leave was granted to CIMB to file any legal action against High-5 in relation to the property including to obtain vacant possession of the Property, the outstanding lease rental, double rental, interests and costs and that CIMB shall not execute or enforce any judgment obtained in its claim unless with the further leave from this Court in the event a restraining order Section
176(10) of the Companies Act 1965 subsists.
[26] On 28.11.2014, CIMB had filed a Defence and Counterclaim to the said civil Suit (“the Counterclaim”). On 6.1.2015, CIMB filed an application to strike out the 2014 Suit as well as an application for Summary Judgment against High-5 wherein CIMB are seeking for, inter alia, vacant possession of the Property and payment of the outstanding lease rental of RM608,000.00 per

11 month commencing from 16.8.2013 until delivery of the vacant possession of the Property to CIMB.
The Applicants’ Case
[27] It is submitted by the Learned Counsel for the Applicants that despite the rejection of the appeal by Bursa Securities and the de-listing of HCB, the Applicants are still desirous to proceed with their efforts to resolve the indebtedness and to preserve the business of the Applicants.
[28] It is contended that the Applicants’ current financial situation is due to the discovery of financial irregularities. The Applicants were not given time to resolve the matter. The adverse impact to the business of the Applicants included the following:-
(i) freezing of the HCB trade lines;
(ii) the absence of any credit terms for purchase of raw materials from suppliers;
(iii) default in various financing facilities;
(iv) limited funds;
(v) increase in the cost of production; and
(vi) adjustments in the sum of RM273,247 million were recorded as additional expenses in the financial statements of HCB.

12
[29] It further submitted that the business of the Applicants is at the brink of turnaround and the completion of the proposed corporate and debt restructuring exercise (PCDRS) would help to catapult the Applicants back into business and also be beneficial to all the creditors.
The Proposed Scheme
[30] The Applicants have formulated a revised PCDRS with the hope that it will provide the financial impetus. The PCDRS is summarized as follows:
(i) A new company (Newco) will be incorporated to address the estimated losses of the High-5 Group.
(ii) Injection of interim funding.
(iii) A scheme of arrangement for the unsecured creditors.
(iv) Bilateral settlement for the secured creditors and hire purchase creditors. Failing which the secured creditors and hire purchase creditors can realize their assets and participate in the proposed scheme of arrangement
(PSOA).
[31] The allocation of a fixed settlement sum to be distributed to all the Scheme creditors of the Applicants:-
(i) 29.49% to be paid from cash proceeds raised by proposed rights issue and where the funds raised is insufficient, the Scheme Creditors shall be entitled to the settlement of the shortfall in the form of ordinary Newco

13 shares of RM0.10 each with 1 warrant in Newco for every 2 ordinary shares in Newco or payments by the
Newco via a structured term loan;
(ii) 19.23% to be paid via Debt Settlement Shares with the
Debt Settlement Warrants which the Scheme Creditors may elect to have Newco encash via a registered issue or repaid by the structured term loan;
(iii) 25.64% to be restructured into a 7 year term loan to be repaid by the Newco (STL-1);
(iv) 25.64% to be restructured into a structured term to be paid by the Newco; and
(v) the Scheme creditors granted options to subscribe to ordinary shares in the Newco at an issue price of
RM0.10 each with free warrants in the Newco exercisable within 3 years from the completion date of the Proposed.
[32] STL-1 is a fixed repayment schedule comprising annual payments of 26.4% of the Fixed Settlement Sum. According to the Applicants, the said annual payments will be predicated on the profitability of the Newco group of companies. The STL-2 also has a fixed repayment schedule. The annual payments are also predicated on the profitability of the Newco Group for a period of 12 years from the commencement date.

14
[33] The Term Loan has a fixed repayment schedule over a period of 7 years commencing from the date of full implementation of the PCDRS which includes payment of the Fixed Settlement
Sum in 5 equal installments between the 3 rd to the 7 th years after the commencement date. In addition, the Scheme creditors would also receive annual interest payments of between 5% to 7.5% under the Term Loan.
[34] The Term Loan, STL-1 and STL-2 are secured against a new debenture over the present remaining assets of HCSB and its subsidiary, Ivory Overpower Sdn. Bhd. and a second debenture over the fixed assets of HCSB charged to Malaysia Building
Society Berhad.
[35] It is further submitted by the Applicants that in respect of the 3 separate proposed PSOA, there is no opposition by any of its Scheme Creditors as against the proposed PSOA. The only opposition to the proposed PSOA is from Amislamic Bank Bhd. and CIMB opposing the proposed PSOA of HCB.
[36] Under the Proposed Scheme, CIMB is classified as an unsecured creditor under the category of Scheme Creditors. Under the terms of the Proposed Scheme:
(a) all of the outstanding lease rentals due and payable to CIMB as at the Cut-off Date of 31.10.2014 will be compromised; and

15
(b) all of the lease rentals accruing after 31.10.2014 until the settlement of the dispute between CIMB and the
Applicants are to be waived.
[37] It is the submission of the Applicants that they are not at all insolvent. The Learned Counsel for the Applicants urged this
Court to look at the sustainability of the business of the Applicants once the Scheme is implemented. The Applicants’ business is a viable business as the losses have been reducing over the years since the discovery of the financial irregularities. This can be seen from the audited accounts of the HCB for the years ending 2012 and
2013 and the unaudited accounts for the year ending 2014. It is also contended that the Applicants would be able to fully recover and revive their business and operation once the PCDRS is implemented.
[38] The Learned Counsel for the Applicants further submitted that even if the Applicants are hopelessly insolvent (which is denied) they are still entitled to the relief under section 176 CA.
[39] The Applicants further stated that their shareholders have in fact approved the resolutions pertaining to the PCDRS including the proposed PSOA at an extraordinary meeting held on 23.12.2014.
This shows that the proposed PSOA is feasible and viable with the bona fide intention of restructuring the Applicants.
[40] Under the Proposed Scheme CIMB has been classified as an unsecured creditor under the category of Scheme Creditors.
Under the terms of the Proposed Scheme:

16
(a) all of the outstanding lease rentals due and payable to CIMB as at the Cut-off Date of 31.10.2014 will be compromised; whilst
(b) all of the lease rentals accruing after 31.10.2014 until the settlement of the dispute between CIMB and the
Applicants are to be waived.
CIMB is thus an affected party who is materially prejudiced by the
Proposed Scheme.
Grounds For Opposing The Application
[41] The opposing creditors (CIMB Islamic Trustees and Ambank) oppose the application on the following grounds:
(a) the Applicants are hopelessly insolvent and the
Applicants’ profit forecast is not sustainable;
(b) there is no certainty that the Applicants will receive the additional funding and that the funding of the Proposed
Settlement Sum is uncertain;
(c) the scheme as presently envisaged is vague and uncertain and fails to show any credible or bona fide proposal or scheme of arrangement;
(d) the scheme is doomed to fail; and
(e) the fatal error in the classification of the creditors.

17
Decision
The Law
[42] Section 176 CA deals specifically with the power to compromise with creditors and members of a company. Subsection
(1) of the said section provides that:
“ Where a compromise or arrangement is proposed between a company and its creditors or any class of them...the Court may on the application in a summary way of the company...order a meeting of the creditors or a class of creditors...to be summoned in such manner as the Court directs
.”.
[43] Where a company in financial difficulties proposes to compromise or enter into an arrangement with its creditors, it can apply for a RO pursuant to section 176(10A) CA which provides as follows:-
“ ...The Court may grant a restraining order under subsection (10) to a company for a period of not more than ninety days or such longer period as the Court may for good reason allow if and only if:-
(a) It is satisfied that there is a proposal for a scheme of compromise or arrangement between the company and its creditors or any class of creditors representing at least one half in value of all the creditors;
(b) The restraining order is necessary to enable the company and its creditors to formalise the scheme of compromise or arrangement for the approval of the creditors or members pursuant to subsection (1);
(c) A statement in the prescribed form as to the affairs of the company made up to a date not more than three days before the application is lodged together with the application; and

18
(d) It approves the person nominated by a majority of the creditors in the application by the company under subsection
(10) to act as a director or if that person is not already a director, notwithstanding the provisions of this Act or the memorandum and articles of the company, appoints the person to act as a director
.”.
[44] Section 176(10A) CA expressly stipulates that the 90 days period may only be extended for “such longer period for good reason if and only if” conditions (a) to (d) of that section have been satisfied. For such extension, the Court has to be satisfied that the other conditions in section 176(10A) CA are also met and that there is reasonable progress towards the achievement of a viable and feasible creditor’s scheme of arrangement.
[45] The RO is designed to shield the Applicants from pending suits filed by creditors to enable the company to formulate and put into effect a regularization plan or compromise for the ultimate benefit of the said creditors or class of creditors as the case may be. The extension of RO is necessary to enable the company and its creditors to formalise the scheme of compromise or arrangement for the approval of the creditors or members but the extension must be for good reason. The words “ good reason ” have been construed by the Courts to mean that:
(a) a bona fide scheme of arrangement has been proposed and presented, with sufficient details provided to the creditors to enable them to make informed decisions as to its feasibility and merits (Re: Re Kuala Lumpur

19
Industries Berhad & Ors [1991] 3 CLJ 2867; [1991] 3
CLJ (Rep) 86);
(b) the scheme of arrangement proposed and presented must not be such that it is bound to fail (Re: Twenty
First Century Oils Sdn. Bhd. v. Bank of Commerce
(M) Bhd. &Ors (No. 2) [1993] 2 CLJ 677) ; and
(c) the interest of creditors, that is, the beneficiaries under the proposed arrangement is safeguarded (Re: Sri
Hartamas Development Sdn. Bhd. v. MBf Finance
Bhd. [1990] 1 CLJ 827; [1990] 3 CLJ (Rep) 106.
[46] In Jin Lin Wood Industries Sdn. Bhd. & Ors v. Mulpha
International Bhd. (No 2) [2005] 7 CLJ 208 where at held [2] and [3] the Court held as follows,
“ The restraining order needed to be extended so that the scheme would not be defeated by the filing of legal suits. If legal suits were to get in the way, all the effort, preliminary discussions and liaising with the relevant authorities to fulfill all the legal requirements would come to naught. As far as the authorities were concerned, the Securities
Commission had asked for and had obtained information regarding the restructuring. The Ministry of International Trade and Industry (MITI) had said that in principle, they had no objections to the scheme
.”.
[47] Justice Azahar Mohamad J (as he then was) in PECD
Berhad & Anor v. Merino-ODD Sdn. Bhd & 2 Ors [2009] 1
LNS 70 explained the purposes of a restraining order granted pursuant to section 176(10) CA as follows,

20
“… (i) to protect the assets of the company pending the possible adoption of the scheme (see: Playcorp v. Venture Stores 7 ACSR
193); (ii) to allow the scheme creditors to properly consider the scheme without extraneous considerations; and (iii) to prevent the implementation of the scheme from being frustrated especially by legal suits (see: Re Clements Langford Pty Ltd [1961] VR 453;
Jin Lin Wood Industries Sdn Bhd v. Mulpha International Bhd
[2005] 7 CLJ 208). It is essential to bear in mind that the power to order a court convened meeting is derived from s. 176(1) of the
Act only when there is a scheme of arrangement being proposed.
The Court must have before it a bona fide proposal of a scheme of compromise or arrangement that is feasible and merits due consideration by the scheme creditors (see: Re Kuala Lumpur
Industries Berhad [1990] 2 MLJ 180 and Re K. Rees Emporium
Ltd [1969] VR 981). Both s.176(1) and s. 176(10) require the applications to be dealt with in a summary way which means the applications are dealt by way of ex-parte before a judge in chambers
(see: Re Kuala Lumpur Industries, Jin Lin Wood Industries Sdn Bhd
[2005] 7 CLJ 208, Sri Hartamas Development [1990] 3 CLJ 106
(Rep); [1990] 1 CLJ 827, Pelangi Airways Sdn Bhd [2001] 6 CLJ
129 and PB Securities Sdn Bhd [2000] 4 MLJ 417). These 2 sub-sections of s. 176 may be brought independent of the other; it is not such that as. 176 (10) application has to be tagged on to a s.176(1) application (see: Re Kuala Lumpur Industries Berhad ).
An ex-parte application is only apt for exceptional cases of valid urgency. Since the applications are dealt with ex-parte and in a summary manner, it is essential that there must be a frank and fair disclosure of all relevant materials including points that may be unfavorable to the applicant, so that if the relief is granted, it would rightly be granted. The Court will require strict compliance of this requirement.”.

21
[48] The RO granted may only be extended pursuant to section
176(10A) of the CA if “there is good reason to do so”.
Therefore, the Applicants must show to this court that the proposed scheme is one that is reasonable, viable, bona fide and fair.
[49] In considering this application for extension of the RO, this Court has also considered issues of public policy and commercial morality to safeguard the interests of creditors. In Sri Hartamas
Development Sdn. Bhd. v. MBf Finance Bhd [1990] 2 MLJ 3
Siti Norma Yaakob J (as she then was) said:-
“The court must now give a critical eye as to whether the scheme is a viable one so as to conciliate the relations between the applicant and its three classes of creditors for the common benefit of the same classes of creditors to whom the scheme is intended to be addressed ...
”.
[50] In Re Kuala Lumpur Industries Bhd. & Anors [1991] 3
CLJ (Rep) 86 VC George J held that:
“
In making a section 176(10) order, there must be a proposal of the scheme of compromise or arrangement (not necessarily ready for presenting to the creditors to be voted upon) but with sufficient particulars to enable the Court to assess that it is feasible and merits due consideration by the creditors when it is eventually placed before them in detailed form
...”.
[51] The proposed scheme must be a viable proposal for the consideration. In the case of Re Lityan Holdings Bhd. & Ors
(Applicants) [2007] 3 CLJ 554 the Court held;
“A restraining order could not be made under s. 176(10) of the
Companies Act 1965 based merely on facts stated in the supporting

22 affidavit of the plaintiffs. The granting of a restraining order is a serious matter that involves the interest of shareholders and creditors of the company. Firstly, before a restraining order can be granted under s. 176(10) there must be in place a proposed
“compromise or arrangement between the plaintiff and its creditors, or any class of them or between the company and its members or any class of them
”. Secondly, the company must be able to present a viable proposal for the consideration of the court supported by views of experts
.”.
[52] It is paramount, therefore, for this Court to ensure in such an application that the welfare of the creditors in the proposed scheme of arrangement is safeguarded. In exercising my discretion in this application, I have considered whether the creditors would be in a better position with the implementation of the proposed scheme of arrangement vis-a-vis liquidation. It necessarily follows that in order to determine, this Court must examine and consider the information disclosed by the Applicants with regards to the framework of the proposed scheme.
[53] The law requires a proposed scheme not necessarily ready for presentation to the creditors to be voted upon but there must be sufficient particulars to enable the court to assess that it is feasible and merits due consideration by the creditors when it is eventually placed before them in detailed form. Furthermore, the court has to be satisfied that there is or that there would be a bona fide scheme.
[54] It is contended by the Applicants that they still have a viable business and the proposed restructuring scheme is one that is

23 feasible and merits due consideration by its creditors. However, this
Court must be satisfied that the terms of the proposed scheme will be enforceable by any creditor who is bound by it and that the scheme should not, without sufficient reason, include provisions which may modify the benefits expected by a creditor.
The Proposed Scheme of Arrangement
[55] The PCDRS is in actual fact based upon the 3 rd Proposed
Regularisation Plan (PRP) which was submitted to Bursa Securities for its approval and was subsequently rejected. In the Affidavit in Support of this application (Enclosure 97) the deponent,
Dato ’ Gan Miew Chee @ Gan Khuan Poh in paragraph 15 of the Affidavit explained that despite having been de-listed, the
Applicants continued with its efforts to formulate a corporate and debt restructuring of the Applicants to address the settlement of the debts,
“…. The Applicants now intend to implement a corporate and debt restructuring exercise (“the PCDRS) based essentially on the proposals under the 3 rd PRP, to be undertaken through the instrumentality of a new public company to be incorporate d (“Newco”), and with adjustments to address the estimated losses of the High-5 Group of
Companies until the business can turn around…”.
[56] The 3 rd PRP was rejected by Bursa Securities because the
High-5 Group had continued to register losses in 9 consecutive quarters. The High-5 Group also had failed to demonstrate to the satisfaction of Bursa Securities that the PRP would be able to

24 generate, sustain and ultimately increase the revenue and profitability to the core business of the Group,
“ In light of the continuing losses, the Company and its
Principal Adviser have failed to address to the satisfaction of Bursa Securities on the ability of the Company’s
Revised Proposed Regularisation Plan to comply with the requirements of PN17, in particular with paragraph
5.2(c) PN17, which requires the Company to record a net profit in two (2) consecutive quarterly results immediately after the completion of the implementation of the plan.
Further, the Company and its Principal Adviser have not demonstrated to the satisfaction of Bursa Securities on the ability of the Revised Proposed Regularisation Plan to generate, sustain and grow the revenue and profitability of the core business of the High-5 Group in the future;
(ii) Lack of certainty on the Company ’s ability to continue the operations of its manufacturing facilities at its existing location and to relocate its manufacturing facilities to a new site as well as the ability to raise further funds from the interim funding arrangements for its operations, which may hamper the Company’s plans to turnaround the financial condition of High-5 Group; and
(iii) High5 Group’s accumulated losses stood at RM378.3 million as at 31 October 2012 will be reduced to approximately RM24.8 million based on High5’s Revised
Proposed Regularisation Plan. However, it is noted that

25 based on the latest financial results as at 30 April 2014, the accumulated losses of High-5 Group stood at RM450.13 million. In view of the latest financial position of High-5
Group, it is uncertain on the ability of the High-5 Group to fully eliminate the accumulated losses under the Revised
Proposed Regularisation Plan in the near future .”.
[57] The accumulated losses as at 31.10.2012 stood at
RM378.3 million. By 30.4.2014 the accumulated losses had increased to RM450.13 million. The total outstanding debt of the
High-5 Group as at the cut-off date of 31.10.2014 is a staggering
RM701,077,000.00.
[58] The proposed scheme must be one that is viable and supported by views of financial experts such as auditors. The profit forecast as set out in Appendix V of the Proposed Scheme is speculative and unsupported by any cogent evidence. This Court would have to agree with the submission of the Learned Counsel for CIMB that the said profit forecast has not been independently verified and is entirely based on the Applicants’ assumptions.
[59] Even the Management Account for December 2014 has not been verified by an independent 3 rd party. The Management
Account (as exhibited in the Applicants’ Affidavit affirmed on
10.3.2015) shows that the Applicants had attained gross profit of
3 months for the period of December 2014 until February 2015.
However, the Applicants have not supported such statement with any documentary verification by an independent party.

26
[60] The forecasted profit of the Group as envisaged by the
Applicants are entirely speculative and unsubstantiated with any documents in support. It is would not be in the interest of the creditors to rely on such information and/or statements which are entirely speculative and unsubstantiated with documents.
The Solvency of the Applicants
[61] The Learned Counsel for the Applicants had submitted that despite the financial constraints, the High-5 Group is still solvent.
The Learned Counsel for CIMB, however, submitted that the
Applicants are in fact hopelessly insolvent as they are saddled with astronomical debts and have no tangible funds to fund the proposed scheme of arrangement. Therefore, it is submitted that as the Applicant is hopelessly insolvent, it would be against public policy to sanction any scheme that it proposes to undertake.
[62] The test of the insolvency of any company must be viewed in the commercial sense, that is, its inability to meet current demands irrespective of whether the company is possessed of assets, which if realised, would enable it to discharge its liability in full.
[63] The particulars of the Applicants ’ trading losses are as follows:
Accumulated
Losses (RM)
Audited Account
(as at 31.10.2012)
378.297 million
Audited Account
(as at 31.10.2013)
425.059 million
Unaudited Account
(as at 31.7.2014)
462. 287 million

27
[64] In my view, based on the facts and documentary evidence adduced through the Affidavits, the Applicants have been suffering increased losses from the year 2012. The Applicants have been trading at a loss since the year 2012 with accumulated losses at almost ½ billion Ringgit. The debts due to the creditors have increased as each new regularization plans was submitted. The losses suffered by the Group since 2012 shows that the Group is unable to meet the operational expenses and the current demands from its creditors. Based on the information as exhibited through the Affidavits, I am of the considered view that the inability of the
Applicants to meet the demands from its creditors is proof that they are insolvent.
[65] The PCDRS does not address the issue of insolvency except to state that the proposed Newco will be incorporated to address the estimated losses of the High-5 Group.
The Injection of Funds
[66] Under the PCDRS, it is proposed that the outstanding debts owing to the creditors will be settled by an Aggregate Settlement
Sum of RM78 million. The proposed settlement will be funded as follows:
(i) The injection of funds through the Interim Funding and the Second Interim Funding arrangements by its investors; and
(ii) The proposed incorporation of a new public limited company (the Newco) which will undertake the issuance of the shares and warrants.

28
[67] The investors are described in the proposed scheme as follows:-
(i) Covenant Equity Consulting Sdn. Bhd. (“Covenant”); and
(ii) Suncsi Holdings Sdn. Bhd. (“Suncsi”).
[68] Under the Interim Funding arrangement, the sum of RM16 million is to be injected into the High-5 group through a subsidiary company of HCSB, Ivory Overpower Sdn. Bhd. (IOSB). The intended funding is to raise the RM16 million in cash to fund the repair and maintenance of the High5 Group’s plant and machinery, the relocation of the factory and the working capital of the Group. The sum of RM16 million has be paid and injected into and fully utilized by the Group (re: paragraph 3.5.3 of the Proposed Scheme).
[69] The profit forecast as submitted by the Applicants is speculative and unsupported by any cogent evidence. There is no certainty that the Applicants will receive any of the additional funds.
[70] Under the Second Interim Funding arrangement, the sum of
RM35 million is to be injected into IOSB (re; paragraph 3.6.1 of the
Proposed Scheme). The investors have injected RM8 million under the Second Interim Funding and the funds have been utilized by the High-5 Group.

29
[71] The balance sum of RM29 million is to be provided by the
Investors,
(i) at their sole option; or
(ii) alternative investors sourced by the High-5 Group.
However, the applicants have not identified the alternative investors who are willing and able to inject the funds.
[72] To show its commitment to fund the scheme, the Applicants exhibited letters dated 9.3.2015 (Exhibit “A-76”) purportedly issued by the Investors. The letters, unfortunately, does not bear any letterhead except that both letters were signed on behalf of the
Investors, Sunsci and Covenant. Both letters have the exact same wordings as follows,
“ We write to confirm that were continuing to provide financial support for the Group subject to the successful implementation of the Proposed Corporate and Debt
Restructuring Scheme of the Group.”.
[73] The letters do not even stipulate the time frame when the funds will be injected into the Group. It is however, expressly stipulated in both letters that the funds will only be injected subject to “… the successful implementation of the Proposed Corporate and Debt Restructuring Scheme of the Group.”. This would mean the funds will only be injected if the implementation of the PCDRS is successful. Looking at the financial scenario of the Applicants, the increased losses, etc it is doubtful whether the PCDRS will

30 succeed without the injection of funds. This will only exacerbate the strained financial status of the Applicants and jeopardize the interest of the creditors.
[74] The letters issued by the investors are very sketchy and lack in particulars giving no comfort to the creditors to ensure that their interests will be safeguarded and the debts owing to them by the Group will be paid. There is no certainty of the funding of the
Scheme and also no confirmation of the actual amount of funding that will be injected by the Investors. There is also no verification or confirmation by any financial institution of the financial status of the investors and their ability to inject funds into the Applicants.
The Proposed Settlement Sum
[75] The proposed cash settlement is dependent upon the existence of sufficient subscribers for the Newco shares. There is no evidence or information stated in the affidavits non in the documents exhibited that there will be sufficient subscribers.
[76] The Applicants contended that the Proposed Scheme has been approved by the shareholders of High-5 Group. However, there is no supporting evidence that the Proposed Scheme has in fact been approved by its shareholders. The Applicants failed to disclose the material particulars with regards to the purported shareholder meeting for e.g. the number of members present, the identities of the members, the number of members who had voted etc.

31
[77] The STL-1 and STL-2 does not have fixed repayment schedule except that the debts will be settled in full within 12 years after at the expected completion date of the PCDRS. This means full settlement would only be in 2027. Similarly, the Term Loan will only be settled 7 years after the expected completion date of the
PCDRS. That would be in 2022.
[78] Based on the documentary evidence, I am in agreement with the Learned Counsel for CIMB that the Applicants do not possess an existing and tangible source of funds to finance the
PCDRS.
Proposed Transfer of Asset
[79] The PCDRS also includes the transfer of High-5 Group entire shareholding investments in its subsidiary company to Newco.
The business of the Group will then be carried on under the Newco.
The proposed scheme further provides that any rental, penalty charges and any amounts due and outstanding to CIMB in relation to the property (the factory) after the cut-off date of 31.12.2014 until the settlement of the dispute shall be waived.
[80] This would mean that High-5 and the Newco would be able to utilize the leased Property without having to pay any compensation to CIMB. It is submitted by the Counsel for CIMB that as owner of the property, any continuous occupation of the property past the Cut-off Date is considered as fresh rental anal must be paid in full.

32
[81] In the PCDRS, it is stated that the Applicants have identified several potential sites to relocate the operation of the High-5 ’s manufacturing business. The cost of the relocation will be funded by proceeds from the proposed share issuance with warrants. The
Applicants however did not identify any alternative manufacturing sites or named any investor that are willing to provide further funding for the relocation.
[82] This Court is of the considered view that the terms of the PCDRS are unconscionable and not bona fide and do not constitute a compromise which would benefit the creditors.
The Creditors
[83] The Secured Creditors and Hire Purchase Creditors (SC and
HP Creditors) are classified as “Scheme Creditors” under PCDRS.
It is proposed that the secured portion of the SC and HP Creditors is to be settled by a bilateral debt settlement scheme. However, the Applicants did not provide any documentary evidence that the proposed scheme has been submitted to the SC and HP creditors for consideration. The SC and HP creditors are not entitled to vote and have no say in the proposed scheme.
Conclusion
[84] Having deliberated on the submissions and an examination of the proposed scheme, I am of the considered view that the scheme is not viable, feasible, workable and not bona fide . The material aspects of the terms of the PCDRS are uncertain and vague.
It is hard to see how the proposed scheme, at the end of the day,

33 would be able to bring the Applicants out of its financial woes. The
PCDRS is also not benefitting the creditors. The Group is under great financial strain and unable to meet the operational expenses.
[85] Under the circumstances, I find no reason to extend the
RO and to proceed with any Court sanctioned meeting to consider the proposed scheme. Based on the reasons mentioned above
Enclosure 96 of OS No. 24NCC-280-08/ 2012 consolidated with
No.
24NCC-134-04/2012 was dismissed with costs. Enclosure 1 of OS No.24NCC-134-04/2012 was also dismissed with costs.
sgd.
( HASNAH BINTI DATO’ MOHAMMED HASHIM )
Judge
High Court of Malaya
Kuala Lumpur.
24 th June 2015

34
Counsels:
For the Applicants/Appellants:
Messrs. Ranjit Ooi & Robert Low
- Alvin Tang Wye Keet
- Tan Chong Lii
- Sharmini Ganasegaran
For the Respondent (Amislamic Bank Berhad):
Messrs. C. Sukumaran & Co.
- Malcolm Fernandez
For the CIMB Islamic Trustee
- Benjamin Dawson
- Eileen Othman
- C A Rajamanickam (PDK)