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This is illustrated in the case of Lian Keow Sdn Bhd (in liquidation) & Anor v
Overseas Credit Finance (M) Sdn Bhd & Ors 71 where the court granted the
liquidator‘s application to recover proceeds of sale from the property sold by the first
respondent (preferred creditor) to the second respondent. The court also allowed
recovery from the second respondent in respect of the resale of property to a
subsequent person.
Section 588FF of the Australian Corporations Act 2001 does not clearly state
whether recovery can be made from a subsequent transferee. However, it can be
argued that the word ‗person‘ from the section could be given a wide interpretation
so as to include subsequent transferee. 72
The undue preference provision in Malaysian section 293 Companies Act 1965 can
only be enforced by a liquidator. This is evident from the wording of section 53(1)
Bankruptcy Act 1967 read with section 293 Companies Act 1965 which clearly state
‗as against the Director General of Insolvency.‘ 73 Based on this, it is submitted the
proceeds of recovery can only be applied on unsecured creditors. This is because a
liquidator‘s duty is to collect assets, realize and distribute them to the general body
of creditors. The same reasoning is given by the Australian court. 74 In the UK, it has
long been established that the secured creditors could not reap the benefits from
avoidance transactions. 75
The objective of restitution is to put the company in a position it would have been if
the transaction had not taken place. This can be seen in the types of orders the court
can make which generally involve an order to restore the property to the company, to
71 [1988] 2 MLJ 449.
72 See also Keay above n42 at 336-338.
73 See also Meiden Electric Engineering Sdn Bhd v Mtrans Holdings Sdn Bhd [2006] 5 MLJ 749, 754.
74 Re Quality Camera Co Pty Ltd [1965] NSWR 1330; NA Kratzman Pty Ltd v Tucker (No 2) (1968)
123 CLR 295; Bayley v National Australia Bank Ltd (1995) 16 ACSR 38.
75 Re Yagerphone Ltd [1935] Ch 392 and confirmed in Re MC Bacon Ltd [1991] Ch 127.
324