Govt files winding-up proceedings against Country Heights unit

KUALA LUMPUR (April 18): The government of Malaysia has filed a winding-up petition against a subsidiary of Country Heights Holdings Bhd over some RM22.7 million of tax liabilities the unit owes the government.

In a bourse filing yesterday, the property developer said the petition was served to its major, wholly-owned subsidiary Country Heights Sdn Bhd (CHSB), which had been ordered by the High Court to pay the sum to the Inland Revenue Board of Malaysia (IRB), following the IRB’s application for a summary judgement last year.

The sum owed as at March 7, 2017 comprised a claim of RM22.5 million, interest on the said amount at a rate of 5% per annum from Dec 28, 2016, and costs of RM2,500, said Country Heights.

Country Heights said the tax liabilities were incurred during the Asian financial crisis in 1997 and 1998, and that it had written to the ministry of finance (MoF) to appeal against the liabilities imposed. Though the MoF accepted a cash settlement proposal from CHSB, the IRB said it was unacceptable.

Then, on April 3, the IRB suggested that only a settlement in the form of cash to be raised from Tan Sri Lee Kim Tiong @ Lee Kim Yew, a director and major shareholder of Country Heights, or an issuance of Country Heights shares to the IRB, would be acceptable.

CHSB agreed in writing two days later to either of the proposals, but this was later rejected by the IRB, said Country Heights.

In a meeting with the IRB on April 6, Country Heights said, it was suggested that a cash payment within four months would be acceptable, to which CHSB confirmed in writing its agreement on April 10 and was awaiting a response from the IRB to the same, until it was made aware of the petition.

It is confident that the matter can be resolved as CHSB had net assets of RM114.08 million as at Dec 31, 2016, and the group had net assets of RM797.1 million as at the same date.

It also gave an assurance that the amount owed had been fully provided for and that there would not be any financial impact from the proceedings, though the group’s cash for working capital could be reduced by the settlement sum to be paid.

It expects CHSB’s purported tax obligations to be settled before the next mention date for the petition on May 17. The hearing has been scheduled for Aug 16.

In the meantime, it said the winding-up had yet to begin and that CHSB would take all legal steps to challenge the petition, adding that CHSB was solvent and had “more than sufficient assets” to settle the amount claimed by the government.

This article first appeared in The Edge Financial Daily, on April 18, 2017.

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