KUALA LUMPUR (Nov 21): Loss-making LYC Healthcare Bhd (KL:LYC), which operates confinement centres and aesthetic clinics, said it is being sued by one of its key partners, aesthetic doctor Dr Dinesh Kanasen.
In a bourse filing on Friday, LYC said Dinesh is seeking several court orders against the group and two subsidiaries, LYC Beauty & Wellness Sdn Bhd and LYC Dental & Aesthetic Holdings Sdn Bhd, including for the winding-up of LYC Beauty & Wellness.
The lawsuit centres on alleged oppressive conduct in LYC Beauty & Wellness, a subsidiary formed after LYC acquired Tao Global Ventures Sdn Bhd in 2022 for RM4 million, which came with a two-year profit guarantee. Tao Global Ventures is the vehicle that owns medical aesthetic clinic Dr D Clinic and beauty and wellness centre iBody by Dr D, both founded by Dinesh.
Under the acquisition terms, LYC held 60% of LYC Beauty & Wellness while Dr Dinesh kept the remaining 40%. At the time, the group then positioned the acquisition as a strategic expansion of its women-and-child platform, with plans to build more centres around LYC’s confinement facilities.
According to the filing, Dinesh alleged that the way LYC Beauty & Wellness is being managed, including how its directors exercise their powers, is “oppressive and/or in disregard” of his interests as a shareholder in the subsidiary.
He is also seeking a declaration from the court that actions taken, or that may be taken, by LYC, LYC Dental & Aesthetic, LYC managing director Sui Diong Hoe and LYC chief executive officer of project management division Soh Hoo Hong, would unfairly disadvantage him as a shareholder.
Dinesh is also seeking an application to declare a 2022 service agreement between Tao Global Ventures and his wife, Dr Sarahanna Selvarajah, as invalid from the very beginning.
The doctor is also seeking a court order to wind up LYC Beauty & Wellness and have a liquidator appointed. He also wants damages, equitable compensation and indemnity costs against the respondents.
LYC said it has appointed solicitors to defend its interests, adding that it “does not expect any material operational impact” from the litigation aside from legal costs and management time spent on the proceeding.
The group’s total investment in LYC Beauty & Wellness stands at RM4.81 million.
However, the group cautioned that a winding-up of LYC Beauty & Wellness could affect its net assets per share, gearing and earnings per share.
On Aug 7, the group announced that its external auditor, Crowe Malaysia PLT, issued a disclaimer of opinion on its financial statements for the financial year ended March 31, 2025 (FY2025) due to material uncertainties that cast significant doubt on its ability to continue as a going concern.
LYC recorded a net loss of RM12.22 million in FY2025, while its current liabilities exceeded current assets by RM63.52 million as at end-March. The group has been loss-making for the past nine consecutive financial years.
Redeemable preference shares totalling RM56.19 million in one of its subsidiaries are also due for redemption in 2025, with extensions granted only subject to settlement of dividends and proper documentation.
The ACE Market-listed group triggered Guidance Note 3 (GN3) criteria in June after its shareholders’ equity fell to RM25.36 million, or 25% or less of its issued capital, requiring it to submit a regularisation plan.
Shares of LYC closed unchanged at 2.5 sen on Friday, with a market capitalisation of RM18.5 million. Year to date, the counter has fallen more than 77%.