LHC moved to liquidate PECO for clearing Rs150 million dues

LAHORE: A local court has been moved to liquidate assets of state-run Pakistan Engineering Company Limited (PECO) to clear Rs150 million outstanding dues of private suppliers, the company said on Monday.

A document filed with the stock market by PECO, which has been dysfunctional for the last two years, showed that five different suppliers filed a winding-up petition at the Lahore High Court against the company.

The petitioners include Ishtiaq Steel Industry, Inam Steel Re-rolling Mills, Al-Majeed Ibrahim Steel Industries, AKK Enterprises SMC, and Anwar Traders. According to the petitioners, PECO is run and managed by persons who fail to maintain proper and true accounts. It is submitted that the company’s affairs are conducted and managed in an unprofessional manner. Certain cheques issued by the company in favour of petitioners when presented for payment were dishonoured.

It has been specifically admitted in the reply letter that PECO, which is on the privatisation list, is not in a position to clear its debts because of the state of financial duress of the company. Unable to pay its debts, the company has become insolvent and its financial condition has deteriorated beyond any reasonable chances of recovery, let alone conducting business at a profit in the near future.

Last month the Securities and Exchange Commission of Pakistan initiated proceedings against the company. The petitioners maintained that it is equitable that the company be wound up by the court in accordance with the provisions of the Companies Act 2017.

The petitioners have prayed to the court to appoint an official liquidator to take over the assets of PECO and directing its winding up and issuing all other necessary orders to ensure liquidation of the assets of PECO and payment of the amounts due and payable to the petitioners.

According to the document, the company was required to make payments of the supplies to the petitioners three months after the receipt of the materials. Except some partial payments, the amounts due to the petitioners have not been paid by the company despite repeated requests and reminders by the petitioners.

Supplies were duly availed and utilised by the company. PECO was under a contractual obligation to pay the amounts owed by them to the petitioners in accordance with the terms and conditions of their contractual arrangement. However, the company has consistently defaulted in fulfilling its payment obligations towards the petitioners, which has resulted in the aggregation of considerable sums.