True Fitness Is Being Wound Up?

True Fitness Is Being Wound Up?  

We Follow Up Again With A Lawyer

By EasyLaw Editorial Board


We have previously written about the options available to True Fitness’s members.

However, it transpired that there are winding up petitions pending against a few companies related to True Fitness.


How does pending winding up petitions of TF change the dynamic?

We decided to follow up with Mr Loke Yuen Hong, a litigation lawyer practising in Low & Partners on this issue.

Owing to the urgency of the matter, we publish the full Q&A, with minor editing, for your reading pleasure.



We understand that True Fitness World Sdn Bhd, Truest Sdn Bhd, True Yoga Sdn Bhd and Fitness Growth Sdn Bhd are facing winding up petition filed by Cheah Chin Kean (The Petitioner).

The Hearing is coming up on the 27.7.2017. What does this mean?

Loke's response : 

A winding up petition is filed when someone wanted the Court to, in layman term, close down a company. There are many reasons where a company can be wound up. The most common among them being the company is unable to pay its debts.

After a winding up order is granted by the Court, a liquidator will be appointed. This would either be the Official Receiver, in this case the Director General of Insolvency, or a private liquidator approved by the Ministry.

The liquidator would then take control of the company. There are quite a few things he has to do, and can do. Generally though, the liquidator will liquidate (sell, convert into money) all the assets of the company, and thereafter, pay the creditors whatever money of the company that he manages to collect. Typically, the creditors would not be able to be paid in full. 

Where the liquidator found evidence that there may be fraud or breach of duties committed by the directors causing the company to lose money, the liquidator may also take legal action against the directors.


There are certain parties, including a minister and some lawyers, who are of the view that the members of True Fitness should sue True Fitness either in the Tribunal for Consumer Claim or by filing a civil action in Court. 

In view of the winding up petition, would that step still be viable?

Loke's response : 

"The answer is yes and no. 

In the event the winding up orders are refused by the Court, then the members should still continue with their respective actions.

If the winding up order is granted however, any person intending to sue, or continue with whatever legal action they are taking against the company would have to obtain permission from the Court. The idea is when a company is wound up, the liquidator would be the person to evaluate whether an alleged debt is in fact proved or not. Any person whose debt is rejected by the liquidator will then have to appeal to the Court.

Generally, monetary claim for breach of contract is something that the liquidator would have to decide on whether the debt is proved or not. 

The shorter and cheaper alternative would be, assuming that the winding up order is granted, to file something called a proof of debt. You have to state your claim, and attach all the supporting documents in it, and submit to the liquidator. He will then evaluate the claim before he distributes the monies collected from the liquidation of the company. "


What would you advise the members to do?

Loke's response : 

"At this stage however, in my personal opinion, the better way would be for the members to group up, and apply to appear in the hearing of these winding up petition. The members should also contact an approved liquidator experienced in the liquidation of a fitness centre and propose to the Court to appoint the said person as the liquidator. "


The members would probably ask

Why do I even bother getting into the thick of the Court proceedings now?

Loke's response : 

"It is important to get an independent liquidator."

The best case scenario would be the liquidator being able to find a white knight to take over business of fitness centre so that the members can continue with their membership.

The worst case scenario, of course, would be the members and other creditors being paid very little for their claim.

Further, as mentioned above, where the liquidator found evidence that there may be fraud or breach of duties committed by the directors causing the company to lose money, the liquidator may also take legal action against the directors.


Loke Yuen Hong

"As such, it is paramount for the right liquidator to be appointed, for the interest of all members and the creditors of the companies." - Loke


Cheah (The Petitioner) proposed a private liquidator in his petition.

What does this mean?

Loke's response :

"This is as explained above. I am not in position to comment on the proposed private liquidator.

In the event the members or other creditors propose other candidates, it would be up to the Court to decide on who is the most suitable person to be appointed as liquidator. In this regard, matters such as the size of the debt of the person proposing the liquidator, the experience of the liquidator, as well as public policy, would be considered by the Court. 

To explain a bit on the “size of the debt”, generally, the Court does give due consideration to the wishes of the majority of the creditors. If for example, persons holding 51% of the total debts of the company collectively agreed on a certain candidate, the Court will take that into serious, though not the sole, consideration. "


Would taking action against the directors and the holding company in Singapore an option to the members?

Loke's response :

" I am unable to comment whether taking action in Singapore is viable. We will have to be advised by a Singaporean lawyer on whether the Singaporean Court has jurisdiction to hear these matters, of which the cause of action arises in Malaysia.     

Be that as it may, if the members and/or the creditors were to take action against the directors and/or shareholders in Malaysia in the High Court and obtained a judgment in favour of the members and/or the creditors, they may apply to enforce the judgment in Singapore.

However, as I have explained previously, it is vital to consider if the directors or the shareholder have in fact defrauded the members and/or the creditors before this route can be taken."


We thank Loke and Low & Partners once again for agreeing to answer our follow up questions

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