Court orders Touchwood winding up

6 June 2014 05:27 am Views - 9476

The Commercial High Court yesterday ordered the winding up of Touchwood Investments PLC, for which purpose a liquidator is to be appointed by July 14, to control the assets of the company and dispose them to pay investor dues.

The decision comes in the wake of a winding-up petition filed by K.A.D.L.P Nanayakkara, a resident of Rajagirya, in  July last year, who alleged that Touchwood Investments had failed to pay a sum of Rs.3,790,000 due to him, as at the date of the winding up application.

Touchwood Investments objected to the winding-up petition and stated that the company will settle all the investors of the Agarwood Plantation in Thailand in accordance with a proposed payment plan.

The company is claimed to be having 22, 500 trees of agarwood in Thailand which is said to be worth over US $ 50 million.

However, the company failed to make the due payments according to the dates stipulated in the proposed payment plan, despite issuing dated checques to the petitioner and other intervening creditors.

Delivering his judgment the Commercial High Court Judge Amendra Senevirathna, observed that although Touchwood had possession of assets worth over 3 billion and there were efforts to revive the company, it was not sufficient to satisfy the debts and dues that have accrued.

The Judge further observed that giving due regard to the crisis prevalent in the company and its inability to service the dues owed to the investors, it was just and equitable to order the winding up of the company.

Accordingly, the liquidator will gain possession and control of assets and will have the ability to dispose of the company’s assets in order to pay the debts that have accrued.

Responding to Mirror Business inquiry, Touchwood Investments Chairman Lanka Kiwlegedera said the company plans to appeal to the higher courts against the decision.

Counsel Avindra Rodrigo instructed by FJ&G de Saram appeared for the Petitioner while Harsha Amarasekara instructed by Paul Rathnayake Associates appeared for Touchwood Investments PLC.

Sri Lanka’s Securities and Exchange Commission suspended trading of Touchwood shares in September last year for 6 days and launched what it called a ‘fully fledged investigation’ into the company.

Then again in March, 2014, the SEC announced a trading suspension on Touchwood shares on the grounds of not submitting financial accounts of the company for two consecutive quarters. The share still remains suspended.

Meanwhile SEC also filed a motion against Touchwood in the Commercial High Court and informed courts the steps it had taken in connection to the company.

The submissions made by the counsel for SEC Dr.Harsha Cabraal, inferred that the SEC was not favouring the winding-up of the company on the grounds of shareholder interest, even though they have not clearly disclosed if they were in support of or against the winding-up of Touchwood.
Touchwood is also involved in another on going court case before the Supreme Court with the SEC and the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) with regard to the preparation of its financial statement for the year ended March 31, 2005.

According to the latest annual report (FY12/13), Touchwood Investments assets stood at Rs.8 billion against Rs.6.8 billion in the previous year. The liabilities amounted to Rs.4.7 billion, up from Rs.3.7 billion. The company also reported Rs.500 million worth of accumulated loss.