This article first appeared in The Edge Financial Daily on August 9, 2019

KUALA LUMPUR: Khee San Bhd, an associate company of London Biscuits Bhd, alleged that Bank of China (M) Bhd (BoC) had committed breach of conduct on the ground that the lender took legal action against the candy manufacturer and its wholly-owned subsidiary Khee San Food Industries Sdn Bhd (KSFI) after a default on a loan repayment of RM14.62 million.

Khee San said in a filing with Bursa Malaysia that it had on Tuesday received a writ of summons together with a statement of claim dated Aug 1 from BoC. Law firm Skrine & Co is representing BoC in the legal action against Khee San and KSFI.

“It’s the opinion of the company that BoC should not have proceeded with legal proceedings against KSFI and Khee San to recover the outstanding amounts.

“The company would like to highlight that the writ of summons (filed on Aug 1, 2019) was in fact filed prior to the meeting held with the bankers (on Aug 2) while BoC kept silent on the filing of the writ throughout the meeting, and in fact misled Khee San and KSFI,” the candy maker claimed.

Khee San said its lawyer believes the group has good defence against BoC’s legal action and that the company was advised to take all measures including lodgement of necessary complaints to banking authorities on BoC’s breach of conduct.

“The company will file a memorandum of appearance next Tuesday and case management has been fixed for next Thursday for further directions from the court.

“Nonetheless, KSFI and Khee San are engaging (in) active dialogue session with all its bankers and will submit a comprehensive proposal to reschedule the loan facilities in due course,” Khee San said.

At press time, BoC had not issued a statement in response to Khee San’s allegations. Khee San’s cash balance shrunk substantially to RM556,000 as at March 31, from RM19 million as at Dec 31, 2018. The candy maker has sizeable receivables of RM113.18 million as at March 31.

Khee San’s substantial shareholder London Biscuits, which holds an18.18% stake, has also defaulted in a RM9.83 million debt repayment to Bank of Nova Scotia Bhd due to “cash flow constraint”.