This article first appeared in The Edge Financial Daily on December 7, 2018

KUALA LUMPUR: Some 300 ex-employees of Lion Group’s 79%-owned unit Megasteel Sdn Bhd may get to receive their unpaid salaries, which makes up half of some RM6.66 million claimed from the steelmaker last year.

Deputy Human Resource Minister Datuk Mahfuz Omar said this in the Dewan Rakyat yesterday when addressing the issue of companies taking steps to restrain assets from being liquidated by creditors, which indirectly denies compensation to affected employees as well.

“Fifty six cases have been filed by employees of Megasteel Sdn Bhd from Feb 14 to Feb 24, 2017, involving 300 ex-employees, with claims amounting to RM6.66 million,” Mahfuz said.

“I have been made to understand by my officers in the ministry that discussions have been conducted between the human resource department, liquidators and representatives of the employees, to look into the need to facilitate the payment of claims.

“In principal, I understand that [the related parties] have agreed to satisfy around half of the claims, which represents unpaid salaries of the employees,” he said.

Mahfuz was responding to questions brought up by Abdullah Sani Abdul Hamid [Pakatan Harapan-Kapar] on how the government will address the plight of ex-employees.

To recap, loss-making Megasteel defaulted some RM3 billion worth of loans in 2015. It ceased operations at its Banting plant in 2016, amid poor market conditions.

Mahfuz said Megasteel had obtained a restraining order from the High Court on the liquidation of its assets, which is valid until Dec 21.

“It is possible that the company will apply for a fresh restraining order after the current one expires. These are some of the hurdles that could stall proceedings,” he said.