Embattled Catalist-listed doormaker KLW Holdings yesterday said it has withdrawn an earlier legal bid to recover a $7 million payment from investor Michael Chan Ewe Teik.
KLW was demanding the repayment of the $7 million paid to Mr Chan as part of three term sheets which the company says were transactions made by its former managing director without the board's authorisation.
The board was told by newly appointed legal advisers Drew & Napier that it is unlikely that it will succeed in obtaining summary judgment against Mr Chan for the $7 million under the terms of the term sheets, as the time for payment came after last Saturday.
KLW was advised to withdraw the earlier action and to file a fresh claim after last Saturday for the monies to be repaid.
On Wednesday, it filed a separate writ of summons and statement of claim against Mr Chan and his company, Straitsworld Advisory, in the High Court.
KLW has been thrust into the spotlight recently after two of its former key executives - Mr Lee Boon Teck and Ms Jaslin Gaw Kuan Ching - came under the Commercial Affairs Department's (CAD) probe for possible breaches of commercial law.
Mr Lee, the former managing director, has since taken a consultancy role in the company.
Ms Gaw, who was previously the firm's financial controller, now heads the operations and human resource department.
It was previously reported that Mr Lee, who founded KLW, had entered into certain unauthorised transactions for the company.
KLW in May announced that the company had paid $16.2 million of commitment fees without directors' knowledge as part of term sheets agreed to by Mr Lee.
Only $9 million has been recovered so far.
Mr Chan is counterclaiming $3.45 million that he alleges KLW owed him from agreements between him and the company through Mr Lee.
KLW said it is assisting the CAD's probe into possible offence(s) under the Securities and Futures Act (Chapter 289) of Singapore.