On Friday, 13 June 2025, gym goers and Pilates girlies who subscribed to 1Fit received devastating news – the fitness platform had shut down immediately due to lack of funds, and the company had started a formal winding-up process [1].
1Fit was a fitness pass that gave users unlimited access to workout classes at studios across the Klang Valley, often at attractive prices — for example, RM3,190.00 for 15 months of unlimited classes.
Not long after the announcement, users of 1Fit began pointing out that the company had still been actively promoting and selling membership plans right before announcing its shutdown. Some even claimed it felt like a scam [2]. Members with unused subscription were told to request refunds but were warned that all requests would be processed in strict queue order and subject to available funds. In the circumstances, what legal remedy can users of 1Fit consider?
The users of 1Fit may consider filing a suit to hold the directors/officers of 1Fit personally liable for the loss that they suffer. Section 540(1) of the Companies Act 2016 (Act) provides that in the course of the winding up of a company or in any proceedings against a company if the business of a company has been carried on with intent to defraud creditors or for any fraudulent purpose, the court may declare that any person who was knowingly a party to the carrying of such fraudulent business to be personally liable for the liabilities of the company.
To succeed in a claim under Section 540(1) of the Act, there are 4 elements to be proven [3]:
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The business had been carried on with intent to defraud the creditors of the company – the courts have held that this includes the company continues to carry on business to incur debts at a time when there is to the knowledge of the directors no reasonable prospect of the creditors ever receiving payment of those debts [4]. The closer in time the promotion of membership plans was to the announcement of 1Fit’s closure, the stronger the case may be for fraudulent intent.
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No.1 occurred during the winding up process of the company or in any legal action brought against the company – according to the Official Statement from 1Fit Malaysia website, 1Fit is now in the process of shutting down officially.
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The directors/person in control of the company participated in the carrying on of the business in that manner – it may be argued that the directors allowed new memberships to be sold/renewed despite being aware of the company’s impending closure.
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The directors/person in control of the company participated with knowledge that the business was being carried on with such intent to defraud – this element requires proof of actual dishonesty, which must be determined based on all relevant facts and circumstances.
While a claim under Section 540(1) of the Act may not be easily proven, it offers affected users a potential path to justice if they can show that 1Fit’s directors knowingly continued to sell memberships despite being aware of the company’s impending closure. If the losses are substantial or shared by a large number of users, this legal option is worth considering. However, if the above elements are not proven, then 1Fit directors will not be held liable under Section 540(1).
[1] https://www.instagram.com/p/DK1_nXmxZWP/?igsh=Z2t6N3R4NXpwYm02 and https://1fit.app/en
[2] https://www.instagram.com/reel/DK1_wNYRGnO/?igsh=cmN1cHJzMTNqczBp
[3] Tay Keong Kok & Ors v Eastmont Sdn Bhd and another appeal [2024] 5 MLJ 683, paragraphs 60, 70, 71 and 122, Court of Appeal
[4] Lai Fee & Anor v Wong Yu Vee & Ors [2023] 3 MLJ 503, paragraph 24(ii), Federal Court
About the Author
Poon Wei Ying is a Senior Associate of XK Law who graduated with First Class Honours from the Cardiff University, United Kingdom. She believes in giving back to the society and that education can change a person’s life.
Disclaimer: This post is not intended as a solicitation, is not legal advice, and is not a substitute for obtaining legal advice. You should not act upon any such information without first seeking qualified professional counsel on your specific matter.
