SHAH ALAM (Jan 21): The High Court on Wednesday allowed a petition by two companies for the compulsory winding-up of THHE Fabricators Sdn Bhd, a subsidiary of delisted TH Heavy Engineering Bhd (THHE).
Judicial Commissioner D Shoba Rajah, however, also allowed an interim stay of the decision pending the filing of a notice of appeal by the liquidators of THHE Fabricators within seven days.
The liquidators' lawyer, Mark Ho Hing Kheong, had initially sought a 14-day stay but this was objected to by counsel for the two companies David Thomas Matthew, who argued that the case had been going on for a long time.
Ho noted that a failure to file the appeal would result in the winding-up, as well as the process to appoint independent liquidators as allowed by the court, to proceed.
Shoba, in her decision, said compulsory winding-up should be granted as a last resort for companies.
She said the court is satisfied there is a prima facie case to allow the compulsory winding up based on Section 464(1) of the Companies Act following irregularities in the company since it had undergone voluntary winding up.
THHE Fabricators' voluntary winding-up took place in late 2023, along with that of its parent company THHE. THHE, which was delisted in 2023, is 64.45% owned by the Ministry of Finance through Urusharta Jamaah Sdn Bhd.
The difference between a voluntary winding-up as opposed to a compulsory winding-up is that in a voluntary action, it is initiated by the company, while a compulsory winding-up is initiated by the court.
The judicial commissioner said the court arrived at its findings following meticulous consideration on matters with regard to factual findings, the evidential position from testimonies and affidavits.
The petition was filed by Boomslang Technology Sdn Bhd (previously known as Blackstone Technology Sdn Bhd) and Dynac Sdn Bhd. It is understood that THHE Fabricators owed more than RM200 million to the two companies.
Questionable payments made after receiving funds
The court also cited an earlier decision by High Court judge Atan Mustaffa Yussof Ahmad in ordering the compulsory winding-up of THHE, the parent company, in May last year.
Shoba also noted that THHE Fabricators had not audited its accounts for almost seven years.
“In a proposed scheme to undergo voluntary winding-up, it seems it is to avoid a court supervised scrutiny.
“In this case, there are payments made by Urusharta Jamaah that are documented where the beneficiaries are disputed by the creditors. This reallocation of funds raise a prima facie concern and create potential conflicts as contended to the prior scheme (voluntary liquidation),” she said.
This, Shoba said, warrants an independent inquiry by appointing independent liquidators and not those appointed by the company.
She noted the abrupt changes in THHE Fabricators from being insolvent, then solvent and being insolvent again, raised abrupt changes in reported solvency that warrants the investigation.
In allowing THHE Fabricators to be wound up under the Companies Act, the court ordered Datuk Gan Ah Tee and Bernard Tan Chek Hean from BDO Malaysia be appointed independent liquidators, replacing Andrew Heng and Ashwin Mahendran from Baker Tilly.
However, the judicial commissioner wanted written submissions as to costs to be paid from THHE Fabricators which is to be determined at a later date.
Mathew appeared with Olivia Loh and Lai Ann Xing for Blackstone and Dynac
Prior to this, THHE Fabricators had gone all the way to the Federal Court to stop the compulsory winding-up proceedings but this was dismissed by the apex court on Sept 9, last year.