KUALA LUMPUR (Sept 18): Practice Note 17 (PN17) company KNM Group Bhd (KL:KNM) has secured an interim order from the Court of Appeal restraining all existing and future legal actions against the group, pending disposal of its main appeal fixed for hearing in May next year.
In a filing with Bursa Malaysia on Thursday, KNM said the appellate court had allowed its application to stay and restrain proceedings. This covers court, winding-up and arbitration proceedings, as well as enforcement processes, labour and industrial court matters, adjudication under the Construction Industry Payment and Adjudication Act 2012, and actions to enforce securities, guarantees or liens.
The court order also restrains creditors from appointing liquidators, receivers, judicial managers or supervisors, or from dealing with the group’s assets without its consent or a further court order.
The decision, which effectively shields the group’s operations and assets in Malaysia and abroad from creditor enforcement while the appeal is pending, follows a series of legal manoeuvres since KNM and its subsidiary KNM Process Systems Sdn Bhd sought court protection in April 2024 to implement a new scheme of arrangement with creditors.
In March this year, the High Court allowed KNM to convene meetings with creditors to deliberate on its proposed scheme of arrangement, noting the plan had “evolved positively” and offered a viable path for the financially troubled group to sustain operations.
However, the court declined to grant a restraining order at the time. KNM later obtained an ad-interim restraining order pending appeal.
On Aug 11, KNM said its scheme creditors approved the group’s restructuring plan, which involves shaving off RM182.04 million in interest and penalties from RM1.93 billion owed by KNM Process Systems.
At the group level, KNM currently owes RM1.23 billion to scheme creditors.
KNM's regularisation plan to exit its PN17 status hinges largely on asset sales. The group has agreed to sell its German unit Deutsche KNM GmbH — the holding company of its main earnings contributor Borsig GmbH — to Japan’s NGK Insulators Ltd for €270 million (RM1.3 billion).
Proceeds are earmarked for debt settlement and issuance of RM204.8 million in zero-coupon redeemable unsecured loan stock.
The group is also pushing through the disposal of its Italian unit FBM Hudson Italiana SpA, after three failed attempts. A binding offer worth €19.5 million (RM101 million) from Switzerland’s SymbEx GmbH and Germany’s Terragarda GmbH is under negotiation.
KNM slipped into PN17 status in October 2022 after its current liabilities outstripped current assets. It submitted a regularisation plan to Bursa on Aug 19.
Shares in KNM closed half a sen or 16.7% lower at 2.5 sen on Thursday, giving the group a market capitalisation of RM101.15 million.
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