EcoFirst Consolidated Bhd has announced its intention to contest a RM20 million lawsuit filed against its wholly-owned subsidiary, BCM Holdings Bhd, by Kerjaya Prospek (M) Sdn Bhd (KPM), a unit of Kerjaya Prospek Group Bhd. The lawsuit arises from the withdrawal of a RM404.35 million contract that had been awarded to Kerjaya Prospek for the construction of a residential development in Kuala Lumpur by BCM in June.
The legal dispute stems from a letter issued by BCM to KPM on November 16, notifying them of the contract’s cancellation and asserting that they were no longer bound by its terms. In response, KPM invoked its right to seek pre-agreed damages, as stipulated in Clause 14 of the contract. This clause specifies that, in the event of BCM’s pre-determination of the letter of award or contract, BCM shall be obliged to compensate KPM with termination damages amounting to RM20 million.
On November 21, KPM exercised its right to recover the pre-agreed damages, with a letter demanding payment within seven days from that date. Failing to comply with this demand would result in legal action initiated by KPM.
EcoFirst, in response to the lawsuit filed by KPM on Wednesday, has affirmed its decision to contest the matter vigorously in defense of its interests. The group has clarified that the financial impact of the lawsuit, if it proceeds, will involve an outflow of cash funds corresponding to the RM20 million, as well as any associated interest and costs. However, EcoFirst has assured that there will be no operational impact on the group as a result of this legal dispute.
As EcoFirst prepares to contest the lawsuit, it remains committed to protecting its position and addressing the claims made by Kerjaya Prospek (M) Sdn Bhd.
Shares of EcoFirst concluded the trading session 0.5 sen higher, or 1.43%, at 35.5 sen, resulting in a market capitalization of RM422.86 million. On the other hand, Kerjaya Prospek saw its shares close down by three sen, or 2.04%, at RM1.44, with the company’s market value at RM1.82 billion.