This article first appeared in The Edge Malaysia Weekly on December 2, 2024 - December 8, 2024

ALTHOUGH MBI — the multimillion-ringgit pyramid scheme that attracted hundreds of investors from as far as China — collapsed in 2018, it continues to cast a pall over several prime property projects in Penang.

One of them is Penang Times Square, which was developed by Ivory Properties Group Bhd (KL:IVORY).

MBI, which was based in Penang, is one of the biggest purchasers of properties in Penang Times Square.

Two months ago, financially distressed Ivory put into motion a scheme of arrangement (SOA) to complete the much-delayed remaining phases of Penang Times Square, which is located in the heart of George Town.

However, the plan was scuttled after being rejected by the majority of the creditors, including companies linked to MBI.

According to sources, Ivory’s court-sanctioned SOA was to complete Phase 3 of Penang Times Square, which has been delayed considerably, but it hit a wall when representatives of MBI voted against it.

The creditors are mainly purchasers of units in the project and some of them are from abroad. Under the SOA, Ivory sought the consent of the creditors to waive the liquidated ascertained damages amounting to RM73.6 million and for it to complete the project.

“Companies under MBI are major creditors by virtue of their ownership of the entire four-storey commercial podium complex and some of the 312 suites in Phase 3 of the project called The Wave. The MBI representatives voted against the SOA, forcing Ivory to put the Penang Times Square project into liquidation,” says a source.

“If MBI had voted for the SOA, Ivory would have got the breathing space to finish Phase 3 and complete Phases 4 and 5 of Penang Times Square with a new partner.”

On Sept 25, Ivory announced the appointment of Andrew Heng and Ashvin Mahendaran from Baker Tilly Insolvency PLT as liquidators for the project.

Based on Ivory’s announcements on Bursa Malaysia, its wholly-owned subsidiary undertaking the Penang Times Square development is both balance sheet and cash flow insolvent and unable to meet its financial obligations. Moreover, the possibility of securing support from potential investors or funders is remote, given the complicated situation.

Developers in Penang say the liquidators have started work on reviving the remaining phases of Penang Times Square. The primary responsibility of the liquidators is to get a white knight to complete the project and settle all the liabilities.

Apart from Phase 3, which is more than 70% complete, there are another two acres of undeveloped land in the project where Phases 4 and 5 are to be built.

Based on Ivory’s original plan, Phase 4 is supposed to be a block comprising a commercial complex and serviced apartments, while a boutique hotel is supposed to be built under Phase 5.

However, developers say any company that comes to the rescue of the Penang Times Square project is likely to change the plan to ensure that they can complete the job, settle the liabilities and make some profit.

In relation to the entry of a white knight, developers say the liquidators have invited proposals to complete the project.

“The liquidators are seeking developers to complete Phase 3 and develop the remaining parts of the project. This is to ensure that there is a proper handover of the properties to the buyers,” says one developer.

The entry of a white knight for the project will also help Ivory with its regularisation plan to get out of its PN17 status. Ivory was classified as a PN17 company in July 2022 after auditors could not form an opinion on its accounts and the company as a “going concern”.

Prior to that, Ivory was the fastest growing developer in the state with large projects, including Penang Times Square and Penang World City. One of the biggest purchasers of Ivory’s developments was MBI, which was founded by Tedy Teow.

In fact, MBI was the anchor tenant of the retail mall of Penang Times Square, but which now remains vacant. The development, completed and handed over in 2008, comprises a 20-storey condominium built atop a four-storey retail mall, which was previously called the Penang Times Square mall.

After MBI became the anchor tenant of the retail mall in 2015, it was renamed M-Mall. The mall, which used to be the meeting point for MBI investors and visitors from China, is empty now.

It is learnt that MBI bought  a lot of the retail units in the mall from the owners and also Ivory. However, some of the transactions were not completed and the deals were rescinded. This resulted in MBI owning many of the retail units in the mall while the rest were caught in dispute, causing the mall to become vacant.

In its heyday, MBI opened outlets in the mall where the goods could only be purchased using M-Coins. After MBI’s collapse, the shops closed down and the mall has been unused since 2020.  

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