Ho Hup unit gets restraining order against creditor following dismissal of judicial management application

• This follows the dismissal of GWSB's application to be placed under judicial management by the High Court in Kuala Lumpur on the same day.

KUALA LUMPUR (Oct 1): Ho Hup Construction Company Bhd (KL:HOHUP) said its 52%-owned unit, Golden Wave Sdn Bhd (GWSB), has obtained an interim restraining order from the High Court in Kota Kinabalu, shielding it from legal actions by its creditors.

This follows the dismissal of GWSB's application to be placed under judicial management by the High Court in Kuala Lumpur on the same day.

Judicial management is a corporate rescue mechanism that allows companies unable to pay their debts to appoint a judicial manager, triggering an automatic interim moratorium to protect them from litigation during the application process.

With the dismissal, the interim moratorium will be lifted, meaning GWSB may no longer be protected from legal and arbitration proceedings against it.

On the restraining order, Ho Hup said in a filing with the stock exchange that the application was filed by Accolades Project Consultancy Sdn Bhd pursuant to Section 368 of the Companies Act 2016.

The order imposes an immediate two-month moratorium, during which GWSB cannot be wound up, according to the beleaguered construction firm.

Additionally, any enforcement of charges or legal actions against GWSB will require court approval during this period, Ho Hup noted.

Ho Hup said GWSB will obtain advice from its solicitors concerning both the judicial management dismissal and the restraining order.

GWSB is 70%-owned by Ho Hup’s property development division, Ho Hup Ventures (KK) Sdn Bhd, which is in turn 75%-owned by Ho Hup.

Notably, Ho Hup and HHVKK are currently being sued by Sabah Development Bank Bhd (SDB) over a loan facility granted to GWSB.

In a filing made in early September, Ho Hup said that it is being sued in its capacity as a corporate guarantor for GWSB, while Ho Hup Ventures is being sued by SDB as a shareholder of GWSB.

At that time, Ho Hup noted that SDB had withdrawn all claims and suits against GWSB after the latter filed for judicial management.

Ho Hup has been in the red for over two financial years, with its net loss swelling to RM19.7 million in the second quarter ended June 30, 2024, compared with RM1.39 million a year ago, due to restructuring efforts and decreased sales in the property development and construction divisions. Revenue fell 68.1% year-on-year to RM21.74 million from RM68.13 million.

As of June, the group had cash and bank balances of RM17.2 million and total borrowings of RM491.8 million.

Shares in Ho Hup closed unchanged at 14 sen on Tuesday, giving the group a market capitalisation of RM66.85 million.

Looking to buy a home? Sign up for EdgeProp START and get exclusive rewards and vouchers for ANY home purchase in Malaysia (primary or subsale)!