People’s Bank obtains Enjoining Order against MTD Walkers and parent company

• Prevents transfer of shares

People’s Bank recently instituted action against MTD Walkers and its parent company MTD Capital Bhd of Malaysia before the Commercial High Court, in the background where a corporate disclosure had been made by MTD Walkers to the Colombo Stock Exchange on 9 September that MTD Capital Bhd intended to transfer its majority shareholding in MTD Walkers to a third party.

People’s Bank preferred the application before Court on the basis that MTD Walkers and its subsidiaries had obtained substantial facilities from People’s Bank and that an approximate sum of Rs. 7.3 billion remained due and owing to People’s Bank from MTD Walkers / its subsidiaries, which may not be recoverable if the majority shareholding in MTD Walkers was transferred to a third party.

People’s Bank through its Plaint also took up the position that there were already several pending cases instituted against MTD Walkers by several financial institutions, including People’s Bank, which had lent substantial sums of money to MTD Walkers / its subsidiaries, and that Enjoining Orders had been obtained / were still in force in the said cases against MTD Walkers. People’s Bank also maintained through the Plaint that given that there had been no effort by MTD Walkers to settle the sums owed to People’s Bank, that the transfer of the majority shareholding in MTD Walkers to a third party would inevitably cause immense loss and damage to People’s Bank. People’s Bank in its Plaint maintained this position specifically in the light of several corporate guarantees had been given to People’s Bank by MTD Walkers as part of security for loans obtained by its subsidiaries.

People’s Bank also very clearly set out in the Plaint that its intention was not to interfere with the operations of MTD Walkers, and that it, People’s Bank, would consent to the transfer of the majority shareholding if a reasonable means of repayment was proposed to the bank by the MTD Walkers/its parent company. The People’s Bank through its Plaint also brought to the notice of Court that a similar Enjoining Order had already been issued by the Commercial High Court on 26 September against MTD Walkers and MTD Capital Bhd in a case instituted by Commercial Bank on the basis of the fact contained in the corporate disclosure of MTD Walkers dated 9 September.

People’s Bank in its application also named the Colombo Stock Exchange as a Defendant in the application merely for the purposes of notice.

Thus, Judge M. Ahsan R. Marikar in the first instance by Order dated 23 October issued an Enjoining Order against MTD Walkers PLC and its parent company preventing the transfer of the majority shareholding of MTD Walkers PLC and / or changing the ownership structure of MTD Walkers until such time as People’s Bank was consulted and a accepted settlement plan was proposed to People’s Bank in respect of outstanding sums owed.

When the case was called on 6 November, having received notice of the aforesaid Enjoining Order / summons, Counsel appeared on behalf of MTD Walkers and MTD Capital Bhd and filed their Statement of Objections to the Plaintiff’s application to obtain interim relief. Thereafter, Counsel for MTD Walkers and MTD Capital Bhd moved that the Interim Inquiry in the case be concluded in an expeditious manner by way of Written Submissions. Accordingly the case was fixed for 20 November and the Enjoining Order obtained against the Defendants were extended. Furthermore, the Colombo Stock Exchange appearing before Court informed Court since the CSE had been named as a Defendant in the action for the purposes of notice that it would not be filing a Statement of Objections in the case. 

MTD Walkers, which is a company engaging in multi-disciplinary activities in Sri Lanka, has of late been in the centre of major controversy in the background where the company and its subsidiaries had obtained significant borrowings from many financial institutions and are unable to repay the same.

The People’s Bank was represented by President’s Counsel Dr. Harsha Cabral, along with Nishan Premathiratne, Nadun Wijayasriwardena Attorneys at Law on the instructions of Messrs. Julius and Creasy.

MTD Walkers and MTD Capital Bhd were represented by Suren De Silva Attorney at Law on the instructions of Messrs. DL and F De Saram.

The Colombo Stock Exchange was represented by Messrs. FJ and G De Saram.