Touchwood former directors to be held liable
The Touchwood case on Thursday took a new twist in the Commercial High Court when lawyers said the former directors should also be held accountable.
The company’s former directors and not only the present Touchwood Chairman/CEO Lanka Kiwlegedera could also be held liable for the company it was stated in court.
Avindra Rodrigo, Counsel for the petitioner in the Touchwood winding up case, had stated that the company directors were not acting bona fide and had committed fraud on the investors and reserved his right to make any further applications to court if and when appropriate.
Court ordered an interim report to be submitted by September 19 by the court appointed liquidator Sudath Kumar.
In the report, the liquidator would be expected to identify other assets available to the company, the lands, any movable assets, data and accounts to be submitted, Counsel appearing for the liquidator, Hafeel Fariz told the Business Times.
He noted that they would try to value the properties even though the deeds were not submitted to the liquidator by Mr. Kiwlegedera.
However, Counsel appearing for Mr. Kiwlegedera, Nihal Fernando stated that the former chairman could not be held liable for the assets of the company as the deeds were taken by the former owners of the company, the Maloneys.
During the proceedings it was found that documents related to the Agarwood plantation in Thailand were not available and had been stolen by the former directors of the company.
Counsel Fernando said the current Touchwood CEO had no knowledge of the assets of the company or the documents pertaining to the assets of the company as all such records had been stolen before he was appointed CEO. Counsel further stated that it is the duty of the Liquidator to find the assets and documents of the company and take over the business of the company. Counsel for the Petitioner, Mr. Rodrigo had countered the arguments stating that once Mr. Kiwlegedera was appointed head of the company he has assumed responsibility for and on behalf of the company and has represented the company in the winding-up action.
Counsel further stated that the liquidator cannot be put on a quest of finding the assets or the records of the company as it is the statutory obligation of the directors of a company being wound-up to hand over the assets and all other documents to the liquidator.
During the proceedings it was stated that Touchwood had disclosed in its 2013 financial statements and in the affidavit submitted to court by Mr. Kiwlegedera that the company had assets worth Rs. 8 billion. But it was found that the present Statement of Affairs has disclosed assets only worth approximately Rs.659 million.
Meanwhile, V.K. Choksy appearing for two depositors P.N. Pestongee of Abans Group and M. Kandasamy of Oxonia Institute raised the issue of the competency and qualifications of the liquidator.
In this regard, he had filed papers to remove the liquidator on the basis that the liquidator up to date had difficulties but had not taken constructive action to mitigate the hardship to depositors. The two depositors have requested for a court panelled liquidator from SJMS Associates.
The application would be supported after the liquidator submits the interim report on September 19 if it was found to be inadequate.