KUALA LUMPUR: Confectionery manufacturer Khee San Bhd (KL:KHEESAN) and its subsidiary are being sued for allegedly failing to honour a consent order to sell and lease back land following an RM18 million loan default.
According to Khee San's bourse filing, the company, along with its unit Khee San Food Industries Sdn Bhd (KFI) and several current and former directors, were served a writ of summons and statement of claim by Tunai Impian Enterprise Sdn Bhd.
Tunai Impian is seeking an order of specific performance requiring KFI to execute the sale and purchase agreement and tenancy agreement for the disputed land. Alternatively, the plaintiff is demanding a total of RM65.74 million in claims, alongside an 8% annual interest rate and other relief.
The legal battle stems from a March 2019 moneylending agreement, where KFI borrowed RM18 million from Tunai Impian and defaulted.
To settle the default, both parties entered into a consent order on June 3, 2021, requiring KFI to sell the land to Tunai Impian and lease it back. The location and size of the land were not disclosed in the filing.
According to Khee San, Tunai Impian claims it supported KFI’s debt restructuring based on representations that the consent order would be fulfilled. The plaintiff alleges that KFI's subsequent refusal to execute the agreements forced the matter to court.
The alternative RM65.74 million claims include RM40 million for deprivation of the land, RM7.2 million for 24 months of back rental (at RM300,000 per month), the RM18 million principal loan amount, and RM540,000 in outstanding interest.
The calculation factors in 91.8 million Khee San shares previously offered to Tunai Impian under a debt restructuring scheme approved in December 2022.
Khee San said it is seeking legal advice. The group expects no material operational or financial impact on its earnings or net assets at this juncture, aside from professional legal fees.
The case has been fixed for case management at the Kuala Lumpur High Court on Oct 5, 2026.
Khee San’s shares closed unchanged at nine sen on Friday, giving the company a market capitalisation of RM110.49 million.