To Put The Company Under Judicial Management

Q: Econ Corp now under judicial management THE creditors of Econ Corporation have succeeded in getting the courts to put the company under judicial management. This gives it a potential lifeline - after an earlier attempt to put it into liquidation was squashed. Mr Tim Reid from restructuring advisers Ferrier Hodgson was appointed the judicial manager after a High Court meeting on March 15. Econ Corp is a subsidiary of mainboard-listed Econ International and was the second-largest construction company in Singapore until it collapsed under $256 million of debts. An earlier scheme of arrangement - a plan to pay off creditors - was not approved by the High Court. Econ Corp's directors then proposed liquidating the company but this was successfully opposed by a group of creditors. Now it appears that Econ Corp has a chance to see if it can survive. At the same time, Econ Corp's parent Econ International announced its restructuring plans yesterday too. Econ International said that there will be a meeting of the creditors today for them to approve their own scheme of arrangement. Econ International's own liabilities stand at about $91.5 million, according to a statement issued by the company yesterday. The plan proposes Econ International to issue new shares at 1.5 cents each to creditors as full payment for their claims. The company's shares last traded at 4.5 cents before they were suspended in November. Econ International said the benefits of this plan over judicial management or liquidation are that existing projects are more likely to continue, which will see creditors recovering more of their money. By remaining listed, Econ International will also find it easier to issue shares to buy a new business - a move which will help the company's share price.

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It is big business for judicial management companies. Foreign companies also coming in to take a piece of pie More companies are in pipeline to face liquidation or judicial management. I find it strange in that when the economy was said to be recovering on the high speed mode, how come more companies went under? During the financial recession in 1997, a lot of companies in Thailand went under - some drown, some were saved under judicial management and some were sold to others. When their economy recovered, there were not more of such as it had been cleaned up. But in Singapore, when the economy is recovering, more companies went under. Why so?