This article first appeared in The Edge Malaysia Weekly on March 29, 2021 - April 4, 2021

A creditor is challenging the legality of the Director General of Insolvency’s (DGI) move to discharge the late Tan Sri Ting Pek Khiing as a bankrupt. Discharging Ting will allow his estate to deal with the deceased’s assets, leaving the creditors in a predicament. Ting died last October, owing his creditors some RM400 million.

The creditor — Southeast Asia Special Asset Management Bhd (Seasam) — wants the certificate of discharge issued by the DGI to be reversed and for Ting’s bankruptcy status to be reinstated. Seasam also wants the court to question the conduct of the DGI for not dealing with five plots of land registered under Ting’s name (individually or jointly). Ting’s estate was vested in the DGI when the former was adjudged a bankrupt in 2010.

Seasam claims that the DGI, whose duty is to act as the receiver of the debtor’s estate and manage it, had failed to take any action to sell the land and distribute the proceeds to the creditors. Instead, the DGI proceeded to discharge Ting as a bankrupt — without giving notice to the creditors — thereby providing Ting’s estate an opportunity to distribute the estate to the beneficiaries, court documents show.

In total, Ting owes eight creditors a total of RM369.93 million. Seasam, the second largest creditor, is owed RM124.72 million. A special purpose company wholly owned by CIMB Group Sdn Bhd, Seasam manages CIMB Bank Bhd’s legacy non-performing loans.

The other creditors are Alliance Bank Malaysia Bhd, Alliance Investment Bank Bhd, Alliance Merchant Bank Bhd, Insas Credit & Leasing Sdn Bhd, Multipurpose Credit Sdn Bhd, Interhill Enterprise Sdn Bhd and Datuk Hu Chang Pee@Hii Chang Pee. It is learnt that some of the creditors are supporting the application by Seasam.

Last Thursday, the High Court granted Seasam’s request for an interim stay to put on hold the discharge issued by the DGI until the matter is heard in court. The court also appointed the DGI as interim receiver to secure the assets of the deceased.

The Malaysian Department of Insolvency website states that the DGI’s duties include the administration of the estate of the bankrupt as well as making reports on the conduct of the debtor. The DGI also acts as the receiver of the debtor’s estate and as a manager when no special manager has been appointed. The DGI is also meant to discover, collect and realise the debtor’s estate for the benefit of the creditors.

An affidavit filed by Ho Yoke Teng, unit head of the commercial recovery department at Seasam, sighted by The Edge, states that Seasam found out that the DGI had issued a certificate under Section 33A of the Bankruptcy Act 1967 to discharge the bankrupt with effect from Feb 7, 2021. Seasam says Ting was discharged by reason of his demise.

It is contended that the decision is “unreasonable and absurd” and that no reasonable person would so act after just taking into account that Ting had died, instead of the fact that there is property under Ting’s name which has not been realised for 10 years; or the proof of debt against Ting and the fact that the public examination is still ongoing. A public examination is held under the Bankruptcy Act for the creditors and the DGI to question the bankrupt on his assets and what had happened to them, and his ability to pay his creditors.

The affidavit also states that the DGI appears to have had a change of mind and issued a certificate to discharge a bankrupt, just three months after the Court of Appeal affirmed the decision of the High Court in dismissing the bankrupt’s application to compel the DGI to issue the certificate.

Meanwhile, some interesting information contained in the affidavit was that Ting passed away before the public examination of eight other witnesses were completed. During Ting’s public examination, he had testified that he had no knowledge as to the source of funds of his wives — Puan Sri Datin Paduka Wong Sui Chuo and Tan Sri Datuk Paduka Mahkota Chai Yu Lan — in the purchase of certain assets in their names. Ting had suggested that the creditors ask his wives how they got the money to buy the assets.

Wong testified that all her monies came from Ting and that it was Ting who arranged for the conveyance of eight plots of land to her name.

The DGI then applied to the High Court for an order that Wong deliver possession of the eight plots of land to the DGI. The application was dismissed and is currently pending appeal.

According to the affidavit, Ting allegedly used a complex web of companies and a number of nominees to hide his wealth and assets from the reach of the DGI and creditors.

“Despite the DGI being under a duty under Section 72(a) of the Bankruptcy Act 1967 to investigate the conduct of the bankrupt and report to the court stating whether there is reason to believe that the bankrupt has committed any act which constitutes an offence under the Bankruptcy Act, or which would justify the court refusing, suspending or qualifying an order of his discharge, there is no evidence that the DGI undertook any such investigations, despite there being clear evidence that the bankrupt failed to disclose his property and interests in those web of companies during his public examination,” Seasam alleged.

The court has fixed case management on May 6 pending the exchange of affidavits.

Ting died last year at the age of 79. He was best known for his involvement in building the Bakun hydroelectric dam in Sarawak and the Sheraton Langkawi Beach Resort. A colourful character in the 1980s and 1990s, he was also behind the construction of Plaza Rakyat in Kuala Lumpur, which was stalled in 1998 owing to the Asian financial crisis.

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