(In Statutory Management)
Report to Equiticorp Holdings Ltd debenture stockholders
Dated 23 June 2022
At the time of our last report, the Statutory Managers and the liquidator of United Securities Sdn Bhd ("USSB") had applied for leave to appeal to the Malaysian Federal Court a lower court ruling that certain legal aspects of our dispute with a Singaporean bank should be heard by the Singapore courts rather than in Malaysia. In September 2021, that application was declined.
The matter was then scheduled for hearing in the Singapore High Court. An original hearing date in October 2021 was adjourned until December and then again to April 2022, due to procedural matters and to allow both sides to obtain and file expert witness evidence prior to the hearing.
At the commencement of the hearing, the USSB liquidator and the bank advised the Court that settlement discussions were in progress to resolve the dispute. The Court granted an adjournment to allow the parties the opportunity to reach a settlement.
The terms of a settlement have now been agreed in principle. The USSB liquidator, and the liquidator of USSB's subsidiary company that owned the property in Kuala Lumpur, have to apply to the courts for sanction to enter into a compromise arrangement. Then the settlement can be concluded and the legal proceedings will be discontinued. At this stage, we are not at liberty to reveal the terms that have been agreed.
There is still an outstanding issue in the subsidiary company in relation to a tax re-assessment on the sale of the property. The liquidator and his advisers are firmly of the view that the profit on the sale of the property is a capital gain, as originally assessed. The Malaysian Inland Revenue now assess the profit as being liable for corporate income tax. A formal review by the Malaysian High Court has been set down to be heard in August 2022. In the meantime, the liquidator and the Inland Revenue are attempting to settle the dispute in order to avoid the formal High Court review process.
There are still many factors which could affect a potential financial return to Equiticorp. Once USSB is wound up, any funds have to pass through the bankrupt estate of Mr Cheah under the control of the Singapore Official Assignee (Cheah was a resident of Singapore when we bankrupted him). At this point we cannot say what possible recovery might ultimately be made by Equiticorp or the timing thereof.
2. Next report
We will write again around 30 June 2023, or earlier if there are any significant developments. Our recent reports are available on our website: www.equiticorp.co.nz
B G Stowell & K T Stotter
Statutory Managers
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