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China Sky shrouded in lawsuits, seeks extension to report Q2 results
CHINA Sky Chemical Fibre Co Ltd said that one of its subsidiaries is being sued by former employees who were laid off, while China Construction Bank has also commenced legal proceedings against the group and its subsidiaries.
In a regulatory filing with the Singapore Exchange (SGX) on Monday, China Sky said that it received an order of court from the district court in Quanzhou, Fujian against its subsidiary Tianyu Chemical Fiber & Weaving Industry Co Ltd on July 18 for a compensation totalling 800,000 yuan (S$162,000) to 34 former employees. The company has paid a total of 330,000 yuan to nine of the claimants.
Meanwhile, China Construction Bank (CCB) also started legal proceedings in an intermediary court in Quanzhou against the group. Based on a preliminary court search by the court on Aug 11, there have been at least five lawsuits filed by CCB with the Chinese court against two of China Sky's subsidiaries, namely Tianyu and Tianjian Special Polymede Fibre Technology Fujian Co Ltd.
China Sky said that it is in the process of engaging suitable legal counsel to proceed with the power of attorney and carry out further investigations into the legal proceedings. It is not able to get further information of the legal proceedings in the meantime.
Separately, the group has to settle an outstanding sum of 3.6 million yuan of salaries and 8.1 million yuan of social security/insurance contribution, and is in discussions with relevant Chinese authorities to do so. No lawsuits has been filed yet against the group or its subsidiaries with regard to this outstanding sum.
Faced with the lawsuits, China Sky said that its Board is assessing its impact on the group's second-quarter results.
It has hence submitted an application to the SGX for an extension of time to announce its second-quarter results by Sept 30.