Friday, 6 June 2014 00:49
In a landmarkruling Commercial High Court orders winding up of defaulting troubled company
In what analysts described as a landmark and emphatic move, the Commercial High Court yesterday ruled that Touchwood Investments PLC (TWOD) be wound up and subject to liquidation to settle dues to creditors.
The much awaited order of the case No. 31/2013/CO filed by F.J. & G de Saram the Attorneys-at-Law for the Petitioner K.A.D.L.P. Nanayakkara on 24 July 2013 to wind-up TWOD was delivered on 5 June in favour of the Petitioner. Following the ruling, TWOD will be subject to liquidation upon the appointment of the Liquidator.
TWOD’s present Chairman and CEO L.W. Kiwlegedara was present in court at the time the order was pronounced whilst the company ran into deep trouble under the management of Roscoe Maloney and his wife, who are now overseas.
Commercial High Court Judge Amendra Seneviratne pronounced the order stating that he took into consideration all the submission made by the Petitioner, the company being wound-up and other intervening creditors.
The Judge further stated that that he considered the submissions made by the Petitioner pertaining to the company’s failure to comply with the statutory demand served by the Petitioner on the company before instituting winding-up action. The Judge further stated that he also considered that debt due to the Petitioner and other creditors were undisputed. The amount due to Nanayakkara is estimated at Rs. 30 million.
The Judge went on to state that considering just and equitable grounds, the company is found unable to pay its debts as the company had not made any attempt to secure or settle the debts despite their claims of having assets worth billions. The fact that the company’s continuous failure to settle the debts owed to the Petitioner and other creditors have also been made note of when delivering the order.
Full exposure of TWOD is estimated at Rs. 300 million and specific claims by agarwood customers serving notice is around Rs. 54 million.
Opposing the winding up application in January TWOD agreed to settle his dues in two instalments; the first instalment being 50% of the total outstanding dues, amounting to Rs. 10.5 million was to be paid to him by 14 January but it failed to make such payment.
TWOD also agreed to pay all its creditors in three instalments and the first instalment was to be paid by 14 January. This was after TWOD’s Kiwlegedara submitted affidavit to court assuring cash infusion of Rs. 200 million in three months and $ 10 million in six months from investors/lenders to undertake repayment without selling assets.
However various reasons were given as to why some of the assurances failed to materialise.
Analysts said efforts of the Petitioner and other intervening creditors have finally paid-off as they now have a glimpse of hope of recovering their dues owed to them by the company being wound-up. Investors were furious over numerous alleged attempts by the current management of the company to delay winding-up proceedings and deprive its creditors by proposing failed settlement plans and presenting cheques that were subsequently dishonoured.
In the light of the winding-up order the Petitioner and other intervening creditors who sought court’s assistance and placed their faith in the law and the legal system feel that justice has been done.
The ruling comes a week after TWOD moved in to a new office at Battaramulla and promised a revival under the new theme “Your Future Breath.” The company is likely to appeal against the Commercial High Court ruling.
Rozali Fernando with Avindra Rodrigo appeared for the Petitioner and Shehan Gunawardene with Harsha Amarasekera PC appeared for the company being wound-up.