KUALA LUMPUR (Jan 26): The Kuala Lumpur High Court has allowed Jepak Holdings Sdn Bhd’s application to go into judicial management.
Judicial Commissioner Nadzarin Wok Nordin, in his written judgment delivered via email to parties concerned, made the judicial management order and appointed Datuk Mohd Afrizan Husain as the court judicial manager of Jepak.
He said the appointment of Afrizan would not prejudice the rights of the other creditors of Jepak as Afrizan is under the supervision and control of the court.
“In any event, the creditors need not fear as the judicial manager is ultimately answerable to the court as he is under the supervision as well as control of the court and is thereby an officer of the court,” he said.
Judicial management is a method of debt restructuring whereby a qualified insolvency practitioner is appointed as an independent judicial manager to rehabilitate a financially-troubled company.
Once a court order for judicial management is granted, a moratorium will be put in place to prevent legal action from being initiated against the company. The company would also not be wound up.
Jepak, the Sarawak-based company central to Datin Seri Rosmah Mansor's solar project graft trial, landed in trouble when the Ministry of Education, which awarded the company the solar power hybrid project in June 2017, set up a task force in October 2018 to investigate allegations that the company had forged the signatures and seals of school principals to make fraudulent claims from the ministry.
As a result, the ministry stopped paying Jepak and this led the company being unable to continue the project, Jepak said in papers filed in court that were sighted by theedgemarkets.com.
“The ministry issued a termination notice dated Oct 2, 2019 but in the meantime throughout the year, it found a white knight to continue with the project,” the court documents stated.
At the same time, Jepak had commenced legal proceedings to claim RM7.8 billion against the ministry and the Malaysian government for purportedly terminating the contract unlawfully, resulting in its debts.
theedgemarkets.com had reported that QEOS Energy Sdn Bhd, led by its founder and group CEO Dr Gabriel Walter, is Jepak's white knight and has taken over the company's reins.
Nadzarin said in his decision that the objectives under section 405(1)(b) of the Companies Act 2016 should be reasonably likely to be achieved hence the approval of the judicial management.
Section 405(1)(b) of the Act states that the court may make a judicial management order if:
i The survival of the company, or the whole or part of its undertaking as a going concern.
ii The approval under section 366 of a compromise or arrangement between the company and any such persons as are mentioned in that section.
iii A more advantageous realisation of the company’s assets would be affected than on a winding up.
“I say this as the sole source of funds to pay off the creditors will be in the form of the damages claim against Ministry of Education (MOE) in the suit by Jepak against the MOE which is financed by QEOS LED, and thus the objective of the survival of the company, or the whole or part of its undertaking as a going concern under section 405(1)(b)(i) and a more advantageous realisation of the company's assets would be effected than on a winding up under section 405(1)(b)(iii) of the Companies Act 2016 would in this court’s opinion be on a balance of probabilities more probable than not be achieved,” he said.
Nadzarin also surmised that 87% of the creditors in Jepak were in support of the nomination of Afrizan.
Some of Jepak’s creditors had previously questioned Afrizan’s eligibility to serve as a judicial manager after the Securities Commission’s Auditors Oversight Board had imposed sanctions on his audit firm in 2019, including a prohibition on accepting new customers, for alleged non-compliance with auditing standards.
Lawyers Shim De Zhen of Messrs Yeoh Shim Siow and Lay Kuan represented Jepak.
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