KUALA LUMPUR (June 8): Serba Dinamik Holdings Bhd's creditors have agreed to stay their applications for winding-up proceedings and the appointment of an interim liquidator on the condition that the beleaguered oil and gas group complies with payment timeline and contract order.

Lawyers for both sides informed Justice Nadzarin Wok Nordin of the arrangement during case management at the High Court on Wednesday (June 8).

The creditors who are petitioners in the winding-up application were represented by lawyers Datin Jeyanthini Kannaperan and Benjamin Dawson. Also in attendance were Datuk John Clark Sumugod and Karen Tan.

Mak Lin Kum appeared for Serba Dinamik and its subsidiaries — SD Controls Sdn Bhd, Serba Dinamik Development Sdn Bhd, Serba Dinamik Group Bhd (SDGB), and Serba Dinamik Sdn Bhd (SDSB).

Sources linked to the case told theedgemarkets.com that the petitioners decided to stay the applications for the appointment of an interim liquidator on the condition that Serba Dinamik's four units comply with the payment and conditions in the contract order under Section 366 of the Companies Act.

"The financial institutions negotiated for safeguards like the appointment of monitoring accountants as well as independent financial advisers to oversee Serba Dinamik," they said.

The sources also said that if the firms do not comply with the conditions, the petitioners will proceed with winding-up proceedings.

"If they don't comply then the petitioners will go back to the winding-up court," a source said.

On April 29, theedgemarkets.com reported that Serba Dinamik and three of its subsidiaries were served with winding-up petitions from six financial institutions that were involved in providing RM1.2 billion in syndicated term financing.

The subsidiaries were Serba Dinamik International Ltd (SDIL) based in Labuan, SDSB, and SDGB.

The creditors proposed Victor Saw Seng Kee, a licensed liquidator of PricewaterhouseCoopers Advisory Services Sdn Bhd, to act as liquidator for Serba Dinamik, SDGB, SDSB and SDIL.

The creditors comprise AmBank Islamic Bhd, UOB (M) Bhd, Standard Chartered Bank (M) Bhd, Bank Islam (M) Bhd, MIDF Amanah Investment Bank Bhd, and HSBC Amanah (M) Bhd.

The court documents said SDGB, SDSB and SDIL were named as the security parties under the syndicated term financing.

The creditors are of the view that Serba Dinamik is unable to pay its debts as per Section 465(1)(e) and Section 466(c) of the Companies Act 2016, taking into account the company's current, contingent and prospective liabilities.

Besides the default on the RM99 million instalment, the petition was also filed on the grounds that Serba Dinamik could not meet the payment obligations related to RM1.78 billion in syndicated term financing.

These events of default included its failure to meet its payment obligations, failure to submit audited accounts within the extended deadline of Nov 30, 2021, as well as Serba Dinamik's classification as a Practice Note 17 company on Jan 6, 2022.

Four senior executives of Serba Dinamik were charged last December for submitting a false statement in relation to the group's record high revenue of RM6.01 billion for the 12-month period ended Dec 31, 2020.

However, the Attorney General's Chambers subsequently decided to withdraw the charges following a letter of representation by the accused persons, who paid a total compound of RM16 million and had the charges withdrawn by the Securities Commission Malaysia.

On March 24, four Serba Dinamik subsidiaries, namely SDGB, SDSB, Serba Dinamik Development and SD Controls, withdrew their applications filed a month earlier at the High Court for these companies to be placed under judicial management after strong objections from its creditors.

On June 2, Justice Atan Mustaffa Yussof Ahmad recorded a consent order with regard to Serba Dinamik's application for a restraining order and scheme of arrangement against the financial institutions.