KUALA LUMPUR (July 10): Alleged unpaid debts of RM37.22 million is the reason for the operator of the PapaRich restaurant chain in Malaysia being slapped with a winding-up petition.
The petition was filed against Papparich Group Sdn Bhd (PGSB) by Agathisfour Sdn Bhd over the amount owed by the group and its subsidiaries and related companies to Papparich Malaysia Sdn Bhd and Roti-Roti International Sdn Bhd (RRI).
According to court documents sighted by theedgemarkets.com, PGSB, Agathisfour and Papparich Malaysia had in May 2014 entered into an agreement for Agathisfour to acquire 4.47 million shares in Papparich Malaysia for RM24 million and another 325,303 new shares in the company for RM6 million.
Under the agreement, PGSB was obligated to settle in full amounts owing (non-trade) to Papparich Malaysia within 36 months from the date of the agreement, as well as amounts owing to RRI by October 2015.
The settlement date for the amount owing to RRI was later extended to May 2017.
However, Agathisfour said PGSB had failed to fully settle or cause to be settled the balance amount owing, totalling RM37.22 million.
Due to the default by the company of its obligations, Agathisfour also initiated an action in the High Court, besides the winding up petition, for various relief including an order for specific performance of the agreements against the company as well as for damages.
This suit is pending hearing at the High Court.
Agathisfour contends that PGSB is insolvent and unable to pay its debts, given that the company failed to pay RM1.069 million owing within 21 days. And is therefore deemed to be unable to pay its debts.
The audited accounts of the company also showed that PGSB had total assets of RM25.85 million which is less than its total liabilities of RM29.48 million.
A court filing of the May 2014 agreement showed that PGB owned a 70% stake in Papparich Malaysia while the balance 30% was held by Agathisfour following the exercise.
Meanwhile, RRI, which is involved in the franchising of restaurants, as well as the manufacturing, supply and distribution of food products, is 100%-owned by Papparich Malaysia.
Companies Commission of Malaysia (CCM) documents showed that PGSB is 49.99% owned by Chen Khai Voon, while the remainder is held by Adventure Driven Sdn Bhd, in which Chen is also a shareholder with Lim Beng Guan.
Chen is the founder of industrial supplies company KVC Industrial Supplies Sdn Bhd and also sits on the board of Nadayu Properties Sdn Bhd and listed company Genetec Technology Bhd.
Lim is the co-founder of ZJ Advisory Sdn Bhd, and is also the majority shareholder of Concrete Parade, which filed a suit against Apex Equity Holdings Bhd last year.
He owns one share in Agathisfour, while the balance of the shares is held by more than 10 other shareholders.
The largest shareholders of Agathisfour are private equity firm Y Capital Management Inc and Cayman Islands-based Agathis Management Ltd.
The winding-up petition will be heard at the Shah Alam High Court on Nov 3.
PGSB also faces another winding-up petition filed by Chen. It is scheduled to be heard on Sept 21.
Papparich opened its first store in 2016 and currently has 55 active stores in the country, according to its website.
Meanwhile ST Group Food Industries Holdings holds the franchise to operate Papparich stores abroad. As at August 2019, it operated a total of 35 outlets, including in Australia.
PGSB’s profits have been declining since 2012 with the company falling into the red in its financial year ended June 30, 2018 (FY18), reporting a net loss of RM11.93 million.
Papparich Malaysia also fell into the red with a net loss of RM536,547 for FY18, versus a net profit of RM1.36 million in FY17.
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