Introduction
The Court of Appeal in Desa Tiasa Sdn Bhd v CME Group Bhd & Anor [2025] MLJU 4345 (“Desa Tiasa“) has clarified an important point of law on the standing of unsecured creditors in judicial management (“JM“) proceedings. It has confirmed that unsecured creditors have no right to intervene or to be heard in an application for a judicial management order (“JMO“), unless such right is expressly provided for by statute or subsidiary legislation.
This decision resolves the uncertainty created by earlier court decisions and re‑anchors JM firmly as a statutory, code‑based rescue mechanism governed by the Companies Act 2016 (“Act“) and the Companies (Corporate Rescue Mechanism) Rules 2018 (“CRM Rules“).
Earlier Court Decisions
Maybank Investment Bank Bhd v Million Westlink Sdn Bhd, Court of Appeal Civil Appeal No. B-02(IM)-1590-08/2019 (“Million Westlink“)
In Million Westlink, the Court of Appeal allowed unsecured creditors to intervene in a JM application. However, no written grounds of judgment were issued. Although the notes of proceedings record the outcome, they do not disclose the court’s reasoning or ratio decidendi. As such, the legal basis upon which intervention was permitted cannot be ascertained. This significantly limited the decision’s value as binding authority.
Goldpage Assets Sdn Bhd v Unique Mix Sdn Bhd [2020] MLJU 723 (“Goldpage Assets“)
In Goldpage Assets, the High Court allowed unsecured creditors to intervene and oppose a JM application. The court reasoned that nothing in the Act expressly prohibited unsecured creditors from being heard. It further held that Rule 13 of the CRM Rules (“Rules 13“), being subsidiary legislation, could not restrict rights which the parent Act had not curtailed. On that basis, the court concluded that Rule 13 could not operate to exclude unsecured creditors from being heard in a JM application.
Leadmont Development Sdn Bhd v Infra Segi Sdn Bhd [2019] 8 MLJ 473 (“Leadmont Development”)
Leadmont Development addressed a different and narrower issue. The High Court considered whether a creditor could apply to set aside a JMO itself, even though neither the Act nor the CRM Rules expressly provided for such an application. The court held that, in exceptional circumstances, the inherent jurisdiction of the court is wide enough to allow a creditor to apply to set aside a JMO, for example where the order was obtained without full and frank disclosure, was made mala fide, or was otherwise substantially defective.
Importantly, Leadmont Development did not hold that unsecured creditors have general standing to intervene in the JM application itself. Rather, it preserved only a narrow exception grounded in the court’s inherent power to protect the integrity of its own process.
The Court of Appeal’s Decision in Desa Tiasa
The Court of Appeal in Desa Tiasa decisively rejected the approach taken in Goldpage Assets.
First, it held that Rule 13 is valid, clear and exhaustive. Only two categories of persons may appear to oppose a JM application:
- a person who has appointed, or is entitled to appoint, a receiver or receiver and manager; and
- a secured creditor.
Second, the court held that there is no inconsistency between the Act and Rule 13. The Act is silent on who may be heard at a JM application, and that silence is lawfully filled by subsidiary legislation.
Third, the court held that Rule 2 of the CRM Rules prevents recourse to the Rules of Court 2012 where specific procedures are already provided.
Fourth, the court observed that Million Westlink carried limited precedential value because no written grounds of judgment were issued, and expressly disagreed with the reasoning in Goldpage Assets.
Unsecured creditors have no right to intervene or to be heard in opposition to the application. Their exclusion is not a procedural technicality, but a direct consequence of the statutory framework governing JM.
Fifth, the court made it clear that unsecured creditors have no right to intervene or to be heard in opposition to a JM application.
Their exclusion is not a procedural accident or an oversight, but a deliberate consequence of the statutory framework governing JM. Standing at the application stage is confined strictly to the categories prescribed in Rule 13 of the CRM Rules, and the court is not at liberty to enlarge those categories by reference to general notions of fairness or participation.
Practical Implications
Desa Tiasa carries several practical implications for stakeholders involved in judicial management applications.
First, JM applications will now be procedurally more predictable and contained. Unsecured creditors cannot intervene as of right to oppose the making of a JMO.
Second, the statutory primacy of secured creditors is reinforced. Their veto rights under section 409 of the Act remain central to the JM regime.
Third, JM is preserved as an efficient and focused corporate rescue mechanism, rather than becoming a multi-party contested process at the application stage.
Fourth, for investors and purchasers in distressed transactions, this decision provides greater certainty that JM proceedings will not be derailed by intervention applications by disentitled unsecured creditors.
Concluding Words
Desa Tiasa is now the governing authority on unsecured creditors’ standing in JM proceedings. It confirms that participation is strictly confined to the categories prescribed by the Act and the CRM Rules, and that unsecured creditors have no general right to intervene or to be heard.
The decision restores doctrinal clarity and procedural discipline to the JM framework, and strengthens its role as a structured, statute-driven corporate rescue mechanism.
It should be noted that the decision in Desa Tiasa is currently pending appeal before the Federal Court. It will be interesting to see whether the Federal Court affirms the Court of Appeal’s strict statutory approach, or whether it introduces further nuances in balancing procedural certainty with greater creditor participation.
Contribution Note
This Legal Update is contributed by Partners Chua See Hua and Janice Ooi.
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