Buying over debts?

November 10th, 2009 by poobalan | View blog reactions Leave a reply »
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I’m not sure what the action means. Is Buying over debt same as bailout or not? Can someone explain?  Is the state government paying Rm392 million to the debtors, and will later collect the money from Talam?

The Selangor assembly has approved a supplementary budget awarding a grant of RM392 million to Menteri Besar Incorporated (MBI) for a debt recovery exercise.

The state assembly reshuffled its schedule to table the supplementary budget today, while the 2010 budget will be tabled tomorrow.

Menteri Besar Khalid Ibrahim said the purpose of the grant is to allow MBI to ‘buy up’ debts amounting to RM392 million owed by property developer Talam Group Corporation (Talam).

The group, over the decade, has accumulated debts with various state subsidiaries and agencies like Unisel, the Darul Ehsan Group and Selangor Education Foundation.

“We are realising those debts,” said Khalid, explaining that MBI now has the right to collect on the ‘purchased’ debts.

He explained that the process has taken a long and circuitous route because of the need to adhere to treasury guidelines.

“Before you take money out of the state treasury, you have to have it approved in a motion,” he said, adding that several procedures have to be followed before the grant is released to MBI.

“MBI will ensure that public-listed Talam fulfills its obligations. The recovered money will be injected into the state government’s consolidated funds. Talam has three months to settle its debts,” said Khalid.

Khalid, who is also the Ijok assemblyperson, said that there have been other cases of companies owing money to state subsidiaries.

“The MBI is setting the procedures down, so that we may do it again,” said Khalid, signalling that there may be efforts by the state to go after these errant debtors.

“There are a lot more resources that the state can unlock and recover,” he added.

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