PUTRAJAYA (May 8): The Court of Appeal has rejected Ministry of Finance (MOF)-controlled TH Heavy Engineering Bhd's (THHE) bid to stop creditors from turning its voluntary winding up into a compulsory one, clearing the way for High Court proceedings on Friday.
The MOF owns 64.45% of THHE through Urusharta Jamaah Sdn Bhd (UJSB). The company was delisted in 2023.
A three-member Court of Appeal panel on Thursday upheld a High Court decision allowing creditors of THHE and THHE Fabricators to begin legal proceedings to place both companies into compulsory liquidation under court supervision.
Under Section 464(2)(d) of the Companies Act 2016, creditors can ask the court to order compulsory liquidation if the court is convinced that a voluntary winding up won't adequately protect the interests of creditors or shareholders.
Judge Datuk P Ravinthran, who led the three-member panel, said they all agreed to reject THHE and THHE Fabricators' appeal because it had no merit.
“This appellate court upholds the High Court decision as there is no appealable error that requires this court’s intervention,” Ravinthran said in his broad grounds.
Judges Datuk Dr Choo Kah Sing and Datuk Ahmad Fairuz Zainol Abidin joined Ravinthran in the online hearing.
The Court of Appeal ruled that High Court judge Ong Chee Kwan used the correct legal test in allowing creditors to start compulsory liquidation against both companies.
THHE Fabricators was ordered to pay RM20,000 in costs to the three creditor companies, while no cost order was made against THHE.
The court heard the appeals last week and gave its decision on Thursday.
Hearing to switch from voluntary to compulsory winding up
On Friday, the Kuala Lumpur High Court will hear the case by the three creditors' to change the voluntary winding up of the two companies to a compulsory winding up.
The hearing will be before judge Atan Mustaffa Yussof Ahmad. A compulsory winding up is court-ordered, usually requested by creditors, unlike a voluntary winding up initiated by the company.
THHE began voluntary winding up in September 2023 after being delisted for a year, stating it couldn't continue operations due to its liabilities.
Global Mariner Offshore Services, Blackstone Technology, and Dynac filed an application against THHE, while Blackstone and Dynac filed separate applications against TH Fabricators. The High Court granted their application on Feb 4 last year.
Lawyers David Thomas Mathews, Olivia Loh, Lai Ann Xing, Koh Jo Vin, and Yeong Wen Yan represented the creditors, while Mark Ho represented THHE and TH Fabricators. Senior federal counsel Hafizah Johor Ariff appeared for the Insolvency Department.
The creditors sought compulsory winding up, claiming the voluntary winding up process had multiple legal breaches. They also argued that the liquidators appointed by THHE and TH Fabricators, Andrew Heng and Ashwin Mahendran, had conflicts of interest, as a former senior executive of THHE worked at the same firm as them. The creditors requested the court to appoint independent liquidators.
The MOF’s stake in THHE, formerly known as Ramunia Holdings Bhd, was obtained through a stake transfer from Lembaga Tabung Haji in December 2018, initiated as part of a rehabilitation plan for Tabung Haji.
The plan involved transferring 100 underperforming listed companies from the Muslim pilgrimage fund to UJSB.
THHE, listed on the Main Market of Bursa Malaysia in 2005, has been in the oil and gas industry since 2002. It suffered losses after the 2014 downturn and hasn’t recovered since.
As at end-June 2022 — the last reported financial results for the group — THHE’s liabilities outweighed its assets. Total liabilities stood at RM425.4 million, while total assets were at RM221.1 million.