(In Statutory Management)
Report to Equiticorp Holdings Ltd debenture stockholders
Dated 26 June 2023
At the time of our last report in June 2022, a settlement had been agreed in principle to resolve the legal proceedings in Malaysia and Singapore concerning a disputed debt owing to a Singaporean bank by Mr Cheah's property-owing companies. Late last year the settlement was completed and approved by the Courts.
The property-owing subsidiary distributed the bulk of the cash held from the sale of the property to the Singaporean bank and the agreed settlement sum to the liquidator of its parent company, United Securities Sdn Bhd ("USSB").
The liquidator of USSB has paid off the creditors of that company but before it can distribute the remaining funds to shareholders, the liquidator's fees have to be approved. We believe the fees proposed by the liquidator are excessive and have objected to them. Consequently, the liquidator has applied to the Malaysian High Court for directions. The application for directions is yet to be allocated a hearing date.
In the meantime, the income tax dispute in the property-owing subsidiary has been resolved and no additional taxes are required to be paid. The funds that had been set aside to cover the potential tax will be split 50:50 between the Singaporean bank and the liquidator of USSB, as had been agreed in the settlement between the parties.
Once the USSB liquidator's fees have been determined by the Court, the winding up of the company can be completed and the residual funds, plus the funds released from the income tax dispute, will be distributed to USSB's shareholders. Mr Cheah's bankrupt estate is the majority shareholder, holding 82% of the shares in USSB. Equiticorp is the largest creditor in Mr Cheah's bankrupt estate.
Mr Cheah's bankrupt estate is under the control of the Singapore Official Assignee as Mr Cheah was a resident of Singapore when we bankrupted him. The process of winding up the estate may take some time as the Official Assignee has yet to adjudicate upon all the claims against the estate, and it will not complete that process until it has received funds from USSB. Equiticorp's debt has been admitted.
Due to many variables still being in play, we cannot say at this time what the possible recovery might be for Equiticorp debenture holders or the timing of any potential distribution.
2. Next report
We will write again around 30 June 2024, 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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