(In Statutory Management)
Report to Equiticorp Holdings Ltd debenture stockholders
Dated 26 June 2013
During the past 12 months, the two sets of legal proceedings in Malaysia continued at a very slow pace, however we did manage to reach the final conclusion in one.
In October 2012, the Federal Court heard the appeal by North Plaza against the Court of Appeal's rejection of the conditional agreement it had entered into to purchase the land owned by City Centre Sdn Bhd ("CCSB"). The 5 judge panel sitting on the Federal Court gave a verbal judgment after a brief adjournment at the end of the hearing. They dismissed the appeal, meaning that the property agreement was terminated. The Federal Court is the highest court in the Malaysian legal system, so there is no further avenue for North Plaza to appeal.
We were very pleased with the decision as the North Plaza agreement was at a price which is well below the current market value of the property. With that matter resolved, the second set of proceedings could be brought on, to appoint a new liquidator to CCSB.
At the time of our last letter to stockholders, these proceedings were being held up by the former liquidator of CCSB appealing against his dismissal. The appeal was to be heard on 26 July 2012, however the hearing was adjourned due to a possible conflict of interest of one of the judges sitting on the appeal bench that day. The hearing took place on 30 August 2012 and judgment was reserved. On 12 September 2012 the judgment was delivered, dismissing the appeal.
On 12 October 2012, the last day for filing, the former CCSB liquidator lodged an application to take his appeal to the Federal Court. We were most unhappy with the prospect of further time being wasted, with every matter being appealed right through to the highest court. After the victory terminating the North Plaza property purchase agreement, we were keen to have a new liquidator appointed to CCSB so the property could be put up for sale. Settlement proposals were exchanged with the former liquidator and an agreement was reached on 27 November 2012, whereby he would withdraw his appeal and we would not seek court costs against him.
There were 3 nominees proposed to take over the liquidation of CCSB. Our nominee is the liquidator of CCSB's parent company, United Securities Sdn Bhd ("USSB"), who we had appointed to USSB some years ago. Mr Cheah and the bank which holds a (disputed) security interest over USSB's shares in CCSB had proposed other insolvency practitioners.
On 3 December 2012 we requested the Malaysian High Court to allocate a hearing date as soon as possible. On 29 January 2013 the Managing Judge directed the three parties nominating liquidators to attempt to come to a mutual agreement rather than having to rely on a court determination. Discussions were held between the lawyers for the three parties and it was concluded that a consensus appointment could not be achieved.
The lawyers reported back to the Managing Judge on 4 March 2013 and he agreed reluctantly to set the matter down for hearing on 19 April 2013. On that date, the judge hearing the case again sought the parties to find a mutually agreeable liquidator. She indicated that if an agreement could not be reached, she was minded to leave the Malaysian Official Receiver to handle the winding up.
We suggested to the other parties the appointment of a major accounting firm which was independent of everyone. The bank was agreeable, however Mr Cheah could not be persuaded to accept this compromise.
On 9 May 2013 the parties returned to court without a resolution. The judge directed written submissions to be filed by 5 June 2013 and arguments in response by 19 June 2013. At the call-over on 19 June 2013, the judge set down 19 July 2013 for the delivery of her decision. She gave no further indication as to her thinking.
Obviously, we would prefer our nominee or an independent liquidator to be appointed. If not, we will be seeking a seat on the Committee of Inspection to oversee the liquidation. We hope there will be no appeals or further delays in having a liquidator appointed, so the process of selling the property owned by CCSB can get under way. The commercial property market in Kuala Lumpur appears to be strong and the location of the CCSB land is very desirable, so we believe a good price should be obtained.
2. Next report
Unless there are any significant developments that warrant an earlier report, we will write again in 12 months time, around 30 June 2014.
B G Stowell
Statutory Manager
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