Case: Paulus Tannos v Heince Tombak Simanjuntak and others [2020] SGCA 85 – majority of Court of Appeal refused recognition of foreign bankruptcy order due to breach of natural justice

Singapore Law; Legal; Lawyer

Significance: In a rare split decision, the majority of the Court of Appeal (Sundaresh Menon CJ and Tay Yong Kwang JA; Woo Bih Li J dissenting) refused recognition of foreign bankruptcy order due to breach of natural justice.

The majority found that the evidence did not prove that:

(i) notices of the bankruptcy application in Indonesia were properly served on the appellants;

(ii) the appellants had actual knowledge of the bankruptcy proceedings but chose not to appear in them.

The appellants were thus deprived of the opportunity to challenge validity of service or liability under the guarantees and object to the making of the bankruptcy orders.

The Court left open the issue of the correctness of the legal principles on recognition of foreign bankruptcy orders: at [22].

Supreme Court case summary found here.

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Case: Ang Chek Chin v ANS Import & Export Pte Ltd (formerly known as Ang Ngee Seng Import & Export Pte Ltd) [2020] SGHC 177 – who has right to be heard in winding up application

Singapore Law; Legal; Lawyer

Ang Chek Chin v ANS Import & Export Pte Ltd (formerly known as Ang Ngee Seng Import & Export Pte Ltd) [2020] SGHC 177

(Coram: Audrey Lim J)

Significance: Generally, a person who is not of the class of persons (company, creditor, contributory, official receiver or liquidator) should not be allowed to appear to be heard on the application to wind up the company. However, in appropriate circumstances, a person who would be directly affected by a winding up order may have the right to be added as a party to the proceedings.

S 285 of the Companies Act to summon a person is not meant for the purpose of determining whether a winding up should be granted but predicated on a winding up order made or provisional liquidator being appointed. The proper procedure for summoning witnesses is in s 257(2) of the CA, which allows the court on a winding up application to do certain things including directing a trial and directing that oral evidence be taken.

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Case: Re Design Studio Group Ltd and other matters [2020] SGHC 148 – Roll-up financing granted super-priority

Singapore Law; Legal; Lawyer

Re Design Studio Group Ltd and other matters [2020] SGHC 148

Significance: The High Court granted the applicants super-priority to a debt arising from rescue financing under s 211E of the Companies Act, now s 67 of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA“). Notably, the financing was a ‘roll-up’, i.e. using newly input post-petition finances to pay off existing pre-petition debt, such that the pre-petition debt is effectively paid off and “rolled up” into the super-priority post-petition debt.

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Case: Re PT MNC Investama TBK [2020] SGHC 149 – Foreign company held to have standing to apply for moratorium for a scheme of arrangement

Singapore Law; Legal; Lawyer

Re PT MNC Investama TBK [2020] SGHC 149 – Foreign company held to have standing to apply for moratorium for a scheme of arrangement

Significance: Indonesian company successfully applied for a moratorium under section 211B of the Companies Act, now section 65 of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA“) (which came into force on 31 July 2020). The court, per Aedit Abdullah J, was satisfied that the applicant has a substantial connection to Singapore as per s 351(1)(d) and s 351(2A) of the Companies Act, now s 246(e) of the IRDA.

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Legislation Update: COVID-19 (Temporary Measures) Act 2020

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Summary

If your business has been affected by COVID-19, consider if you may seek temporary relief under the new law or object to another party relying on such relief.

First, determine if your contract falls within the Scheduled Contracts.

Second, analyse or get legal advice on whether the inability to perform obligations is to a material extent due to a COVID-19 event.

Third, if you are the defaulting party, serve a notification for relief. If you are the non-defaulting party, consider whether to apply to the assessor for determination if such relief is entitled.

Fourth, if you have ongoing legal proceedings or action or arbitral proceedings, consider if you are barred from continuing further steps.

If your organization requires the conduct of meetings e.g. Annual General Meetings, take note of alternative arrangements for the conduct of meetings which would be compliant with circuit breaker and other measures.

If you are a property owner or tenant, consider if you may be required or entitled to pass or receive the benefits of property tax reductions.

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Case Update: Pathfinder Strategic Credit LP and another v Empire Capital Resources Pte Ltd [2019] SGCA 29 – Necessary Disclosure for Leave for Creditors’ Meeting for Scheme of Arrangement

Singapore Law; Legal; Lawyer

Significance: Singapore Court of Appeal sets out principles on reasonably necessary disclosure required for court to grant leave for calling a creditors’ meeting to consider a proposed scheme of arrangement. Court holds that applicant did not provide necessary financial disclosure required and refused to grant leave.

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Case Update: SK Engineering & Construction Co Ltd v Conchubar Aromatics Ltd and another appeal [2017] SGCA 51 – Court of Appeal reverses sanction of scheme of arrangement

Singapore Law; Legal; Lawyer

Significance: Singapore Court of Appeal reverses the High Court decision’s to sanction a scheme of arrangement on the basis that certain majority creditors owed genuine debts to the companies in question, and found that the High Court should not have sanctioned the schemes without proof of authenticity of those debts. The Court also found that there was material non-disclosure of the rejection of a restructuring proposal. The Court of Appeal also considered factors to consider in determining whether a creditor is a related

The Court of Appeal also considered factors to consider in determining whether a creditor is a related creditor to the company (at [41]):-

(a) The scheme company controls the creditor or vice versa. Alternatively, the scheme company and the creditor have a common controlling shareholder, ie, a shareholder who owns (directly or indirectly) 50% or more of the shares in each of these companies.

(b) The creditor and the scheme company have common shareholder(s) who hold a less than 50% but more than de minimis stake in both companies. In this regard, what would be considered de minimis would depend on the facts; for instance, the threshold would be higher in the case of a public listed company as opposed to a private company.

(c) The creditor and the scheme company have common director(s), in particular, director(s) who propose or support the scheme.

(d) The scheme company and the creditor do not have any common shareholder(s), but their controlling shareholder(s) are either:

(i) related by blood, adoption or marriage; or

(ii) where the controlling shareholder(s) are corporate entities, in turn controlled by individual(s) who are related by blood, adoption or marriage.

(e) The creditor is related by blood, adoption or marriage to the controlling shareholder(s) or director(s) of the scheme company.