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Monday, 30 September 2013 01:19 - - {{hitsCtrl.values.hits}}
The company had proposed several settlement schemes to the petitioner subsequent to the filing of the winding-up petition and the company has failed to fulfil its obligation in settling the monies payable to the petitioner due to insufficient funds in the company.
The Commercial High Court (CHC) was told that consequent to the publishing of the winding-up notice, many aggrieved investors have approached the Attorneys-at-Law for the petitioner and communicated their grievances and expressed willingness to claim their dues from the company by supporting the winding-up action filed by the petitioner.
The application also states that it is evident that the company has adopted a ‘Ponzi Scheme’ (i.e. a fraudulent investment scheme) in the guise of a plantation scheme, by operating with several other associated companies, promising to pay returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by company running the operation.
The company sought to be wound up is based in Sri Lanka which has subsequently set up offices in several parts of the world such as Hong Kong, Thailand, Dubai, etc., to attract investors from many parts of the world and have now closed all or most of the said branch offices as a result of grave mismanagement which has resulted in a severe financial crisis in the Touchwood Group of Companies.
Similar to the facts of the case of the petitioner, all other investors have invested large sums of money in various plantation schemes offered by the company and have not been paid the returns of their investment on the due date and have been given various excuses and justifications for the non-payment of dues.
Many investors of the company are currently faced with severe financial hardships and severe mental distress as they have not received the return on their investments and also lost large sums of money and in certain cases the entirety of their life savings, the application stated.
As a general practice adopted by the company to satisfy the investors momentarily, the company has given them false promises to pay, proposed alternative payment schemes in instalments, offered shares in an affiliated company by the name of Touchwood (Pvt) Ltd., in lieu of the return of their investment, issued cheques and presented an affidavit sworn by one of the two main Directors of the company, namely Roscoe Anthony Maloney and J.G. Swarna Maloney, promising payment, all of which have had no value or effect.
Cheques issued to the investors have been issued fraudulently from a closed bank account of Touchwood (Pvt) Ltd., whose shareholders are the company sought to be wound up and Swarna Maloney (the Vice Chairperson of the company), and the company now attempts to deny liability for fraud and oppose the winding up action stating that the cheques were issued by a different entity.
There are many investors in many parts of the world who have suffered severe financial loss as a result of investing large sums of money in Touchwood plantation schemes.
The two main individuals who have been behind the management of the company and who have been acting as Directors in other companies of the Touchwood Group of Companies, Roscoe Anthony Maloney and J.G. Swarna Maloney, have acted in a fraudulent and negligent manner and have shown no responsibility towards the investors and/or the employees of the company and have continued the business according to their personal whims and fancies.
It appears that the two said Directors have now fled the country subsequent to the filing of the winding up petition.
In the absence of the two main Directors, there seems to be no other person of authority to address the issues of the investors and/or to manage the assets of the company as there have been continuous changes in the composition of the Board of Directors of the company.
The company has no sufficient funds to pay the salaries of its employees and has not paid salaries of approximately 200 employees for the last two months.
The company has failed to settle its utility bills on time and there have been occasions where the company’s electricity supply was suspended due to non payment of bills.
It has been revealed that the Chairman and the Vice Chairperson have utilised company assets to fulfil their personal requirements currently owe approximately Rs. 200-300 million to the company.
The assets of the company are currently at great risk due to the mismanagement of the company and the absence of the Chairman and the Vice Chairman at this crucial stage places all the assets of the company at risk as the company is currently managed by Directors who have been recently appointed to the Board of Directors who are not sufficiently competent in managing the company and/or maintaining the main business of the company (plantations).
Prevention of the disposal of assets of the company is vital in safeguarding the interests of the investors as it would guarantee payment of the monies payable to them by the company, the application stated.
Under the circumstances the assets of the company are under great risk and there may be irreparable loss and damage to the same, leaving the investors no hope of recovering their monies. Given this circumstance, the petitioner has stated that under and in terms of Section 270 and 271(a) of the Companies Act No. 07 of 2007, the company is deemed unable to pay its debts.
He has also stated that it is “just and equitable” that Touchwood Investments Plc be wound up by the Court in terms of the Companies Act No. 07 of 2007
“For the aforesaid reasons, it is now necessary that a liquidator be provisionally appointed by Court under and in terms of Section 286 of the Companies Act No. 07 of 2007 read with Rule 11 of the Companies Winding-Up Rules 1939 to take custody of the assets of the company sought to be wound up until the making of a winding up Order,” the application to CHC has stated.
