Creditors granted order to wind up Serba Dinamik, three subsidiaries

KUALA LUMPUR (Jan 10): The High Court granted an order for six financial institutions to wind up Serba Dinamik Holdings Bhd — an oil & gas firm that was embroiled in audit disputes and legal suits against its former external auditors, the stock exchange and the Securities Commission Malaysia (SC) — together with its three subsidiaries, Serba Dinamik International Ltd (SDIL), Serba Dinamik Sdn Bhd, as well as Serba Dinamik Group Bhd, over debts totalling about RM5 billion.

Judicial commissioner Ahmad Murad Abdul Aziz allowed a petition filed by Standard Chartered Saadiq Bhd, HSBC Amanah Malaysia Bhd, AmBank Islamic Bhd, MIDF Amanah Investment Bank Bhd, United Overseas Bank (Malaysia) Bhd, and Bank Islam Malaysia Bhd, and granted an order to wind up the four companies.

Upon being wound up, the companies will be placed under Victor Saw, a liquidator from PricewaterhouseCoopers (PWC).

This is the largest insolvency case in the courts, according to Benjamin Dawson who appeared for the bilateral lenders in HSBC Amanah and HSBC Bank given the debt of RM5 billion.

He said putting the case into context, this is a case of a group of companies which has the largest debt owing in the insolvency court, and it does not have a credible restructuring plan.

There is no evidence to support the value of their assets, or the buyers of their assets, Dawson told the court, adding that this is the situation the creditors had to deal with in the past year.

He added that in the judicial management application, Serba Dinamik said that it is eager to pay the creditors, but nothing came out of that, with the group failing to pay the creditors on Aug 31 and at the end of 2022.

Lee Shih on behalf of the interim liquidator said that Serba Dinamik and the respondents had not filed the statement of affairs, and that they had also failed to disclose where the assets are. In addition, the directors — some of whom are in SDIL — also refused to divulge details.

However, Serba Dinamik announced to Bursa Malaysia that it is seeking legal advice to appeal or set aside the winding-up order granted against the group and three wholly-owned units over debts of about RM5 billion.

The company said that following the winding-up order, its directors have been rendered functus officio (without further authority) save for residuary powers to appeal against the order.

Any further queries in regard to the affairs of Serba Dinamik are to be directed to its liquidator, the group said in a bourse filing on Tuesday.

Serba Dinamik’s impressive earnings growth in the past just disappeared overnight after its external auditor KPMG flagged accounting irregularities issues.

It incurred an annual net loss of RM1.09 billion for the financial year ended June 30, 2022, and missed the deadline to submit an annual report to Bursa Malaysia.

The latest quarterly financial report shows that Serba Dimanik incurred a net loss of RM104.6 million for the quarter ended Sept 30.

To recap, in December 2021, the company's chief executive officer (CEO) Datuk Mohd Abdul Karim Abdullah and three other top executives were charged with providing false reports to the SC.

The four were charged upon the completion of the investigation on the company by the SC in view of the audit issues flagged by its former external auditor KPMG in May 2021.

While the minorities of Serba Dinamik were licking their wounds and waiting for the truth to be revealed in the court, many jaws dropped when the four executives were let off with just a compound, instead of being tried in court and possibly face jail time for the offences they were charged with.

The four were compounded RM3 million each. Nearly RM6 billion market cap was wiped off after its share price tumbled to barely one sen before it was suspended on Dec 22 from RM1.61 in May 2021.

The allegations of accounting irregularities at Serba Dinamik were brought to the daylight in May 2021 as its former external auditor KPMG flagged several sales transactions, receivables and payables, including its IT contract abroad.

The court decision will mark the end of the final chapter of Serba Dinamik's history, which is likely to be cited as an example of corporate scandal and accounting irregularities, among other companies in the future.