RAINTREE F&B SDN BHD RED SENA BERHAD

RAINTREE F&B SDN BHD RED SENA BERHAD

The court held that the Remaining IPO Proceeds were subject to a Quistclose trust and the Securities Commission Equity Guidelines and prospectus/articles operate to exclude Raintree, the management team and connected persons from participating in the liquidation distribution; distribution of the Remaining IPO Proceeds must be governed by the Equity Guidelines and general equitable principles (not the ordinary pari passu insolvency rule), therefore Raintree is not entitled to the Remaining IPO Proceeds and Prayer 1 is dismissed.

Citation
WA-28PW-626-11/2019 (Mahkamah Tinggi)
Parties
Applicant (in Liquidation) / Respondent to Intervention: Red Sena Berhad (In Liquidation); Intervener / Proposed Intervener (applicant of Motion): Raintree F&B Sdn Bhd; Amicus Curiae: Securities Commission Malaysia
Court
High Court
Jurisdiction
Malaysia
Judgment Date
15 August 2022
Case Number
WA-28PW-626-11/2019 (Mahkamah Tinggi)
Procedural Posture
Voluntary Winding Up (spac) Under Companies Act; Post Liquidation Distribution Dispute / Interlocutory Motion for Intervention and Variation of Prior Order Remitted to High Court for Determination (final Decision on Prayer 1)
Outcome
Prayer 1 of the Motion dismissed; Raintree not entitled to distribution of Remaining IPO Proceeds
Legal Topics
SPAC Governance, Quistclose Trust, Liquidation Distribution, Intervention in Proceedings, Securities Commission Equity Guidelines, Construction of Prospectus and Articles
Source Language
Malay/English
Company Law Insolvency and Liquidation Equity Law Securities Regulation SPAC Governance Quistclose Trust Liquidation Distribution Intervention in Proceedings +2 more

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Parties

Red Sena Berhad (In Liquidation)

Applicant (in Liquidation) / Respondent to Intervention

Raintree F&B Sdn Bhd

Intervener / Proposed Intervener (applicant of Motion)

Securities Commission Malaysia

Amicus Curiae

Procedural Posture

Voluntary Winding Up (spac) Under Companies Act; Post Liquidation Distribution Dispute / Interlocutory Motion for Intervention and Variation of Prior Order Remitted to High Court for Determination (final Decision on Prayer 1)

Legal Issues

  1. 1 Whether pre-IPO investors, management team and connected persons (Raintree) are entitled to participate in distribution of Remaining IPO Proceeds upon liquidation of SPAC
  2. 2 Whether Securities Commission Equity Guidelines and prospectus/articles constitute binding law governing distribution and exclude certain persons
  3. 3 Whether monies in IPO trust account are held on Quistclose trust for IPO investors and thus excluded from liquidator's distribution

Ratio Decidendi

The court held that the Remaining IPO Proceeds were subject to a Quistclose trust and the Securities Commission Equity Guidelines and prospectus/articles operate to exclude Raintree, the management team and connected persons from participating in the liquidation distribution; distribution of the Remaining IPO Proceeds must be governed by the Equity Guidelines and general equitable principles (not the ordinary pari passu insolvency rule), therefore Raintree is not entitled to the Remaining IPO Proceeds and Prayer 1 is dismissed.

Court Disposition

Prayer 1 of the Motion dismissed; Raintree not entitled to distribution of Remaining IPO Proceeds

Orders

  • Prayer 1 dismissed
  • Costs of RM10000 awarded to the Securities Commission