High Court Issues Key Decisions on Schemes of Arrangement

The recent decision of the Malaysian High Court in Re Top Builders Capital Bhd & Ors [2022] MLJU 1 reaffirms some key principles about schemes of arrangement ("SOA"). These include:

1. the classification of creditors in the SOA is to be based on the similarity of legal rights;
2. the contents of the explanatory statement(s) should be clear, complete, and not misleading, and there is a need to be selective with the facts;
3. that the proceedings of scheme meeting held virtually are valid;
4. the scheme Chairman could extend the deadline for the submission of proof of debt forms for the SOA without a Court order;
5. there must be some prima facie evidence of impropriety to allow scheme creditors to inspect the proof of debt forms of other scheme creditors; and
6. the issue of whether to discount or to disregard the votes of wholly-owned subsidiary creditors is a matter of discretion for the Court based on several discretionary factors.

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