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KXD Digital Files for Liquidation

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by Ernie B. Calucag

Mainboard-listed Chinese multimedia firm KXD Digital Entertainment said Monday that it has made a court application to be wound up as it is unable to pay its debts.

KXD, which has been caught in a police investigation, has proposed the appointment of Yit Chee Wah Steven of FTI Consulting (Singapore) to be its liquidator, it said in a filing to the Singapore Exchange (SGX).

This follows after the group’s announcement last month that its interim judicial managers plan to step down and that the SGX had asked it to start delisting procedures as soon as possible.

“The company or its controlling shareholder must comply with rule 1309 of the listing manual to provide a reasonable cash exit offer to shareholders,” it said last April, adding that SGX has informed it that the cash exit offer must be completed within one month.

In June last year, SGX reprimanded KXD as well as its former chairman and CEO for breaching a number of listing rules and failures in corporate governance after a special audit flagged several grave lapses.

KXD reportedly failed to inform shareholders that it had ceased business operations, effectively becoming a cash company. It also failed to promptly disclose lawsuits filed against it by Royal Philips, and the default judgments entered against KXD in 2007-2008.

In January this year, the China-based multimedia firm has been ordered by the Commercial Affairs Department (CAD) to produce company documents in a probe by the white-collar crime buster under the Securities & Futures Act.

The Securities and Futures Act (Chapter 289) contains laws related to the issuing and trading of listed company securities.

Trading of KXD shares is still suspended. It made its trading debut on the Singapore market, with its shares surging to twice its offer price of S$0.23 a share on its first day of trading. The stock last traded in May 2010 at S$.01 per share.

The Singapore bourse has stepped up its scrutiny of accounting practices of Singapore-listed Chinese companies, more popularly known as S-chips, after two waves of accounting problems last year and in 2008.