INV - Judicial Management

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Questions and Answers

What is the primary purpose of judicial management as outlined in the IRDA?

To offer prospects of recovery or better realization of assets (correct)

To liquidate company assets immediately

To ensure compliance with environmental regulations

To provide financial advice to insolvent companies

Which section of the IRDA allows for the appointment of an interim judicial manager?

Section 90

Section 91

Section 94

Section 92 (correct)

What condition must be met for a judicial manager to be appointed in cases prejudicial to unsecured creditors?

Immediate liquidation is required first

Standard company bylaws must be followed

Majority consent from all creditors

Public interest exception must apply (correct)

Which section in the IRDA outlines the requirements for a resolution of creditors in judicial management?

Section 94 Signup and view all the answers

According to the IRDA, how many days' notice must be given to creditors before appointing an interim judicial manager?

7 days Signup and view all the answers

What is required for the appointment of a judicial manager according to Section 94(11) of the IRDA?

Approval from majority of number and value of creditors Signup and view all the answers

What is one of the statutory purposes of judicial management proceedings as specified in the IRDA?

Facilitating recovery of the company Signup and view all the answers

Under what circumstance must a judicial manager be dismissed according to Section 91(6) of the IRDA?

If the process is deemed against public interest Signup and view all the answers

What must a judicial manager be in order to maintain their appointment according to Section 94(12) of the IRDA?

Licensed Signup and view all the answers

In which circumstances can a judicial management application be dismissed under Section 91(6) of the IRDA?

If it disrupts the interests of unsecured creditors Signup and view all the answers

Which of the following best describes the power granted to the court regarding interim judicial managers as per Section 92 of the IRDA?

The right to appoint an interim judicial manager for urgent proceedings Signup and view all the answers

What is required from the creditors prior to the appointment of an interim judicial manager according to Section 94?

A simple majority of number and value Signup and view all the answers

What must be published according to Section 91(4) when applying for a judicial management order?

The notice of application Signup and view all the answers

What is a crucial condition for obtaining a resolution of creditors for judicial management under Section 94(1) of the IRDA?

Proof of insolvency Signup and view all the answers

What determines the conditions for appointing an interim judicial manager based on Section 94 of the IRDA?

Satisfaction of specific statutory criteria Signup and view all the answers

Which element is NOT required to be included in the notice of the appointment of an interim judicial manager according to Section 94?

Details of the judicial management process Signup and view all the answers

What power does the court have under Section 91(5) regarding the application for judicial management?

To issue a notice on the holder of a floating charge Signup and view all the answers

What does the term 'public interest exception' refer to in Section 91(10) of the IRDA?

Cases where judicial management can proceed despite unsecured creditors' concerns Signup and view all the answers

What is one of the primary differences between judicial management and winding up?

Judicial management offers prospects for recovery, while winding up does not. Signup and view all the answers

Which statement is true regarding the entities that can apply for judicial management in Singapore?

Foreign corporations can apply if they have substantial ties to Singapore. Signup and view all the answers

What role do independent insolvency practitioners play in judicial management?

They replace company directors and manage the company’s operations. Signup and view all the answers

How does judicial management benefit a company in financial distress?

It allows the company to restructure and preserves value for creditors. Signup and view all the answers

What is a key feature of the judicial management process?

A moratorium against legal proceedings and enforcement actions. Signup and view all the answers

Which of the following best characterizes the judicial management order in relation to creditor opposition?

The court can grant it despite some creditors opposing the decision. Signup and view all the answers

What does the term 'rehabilitation' in judicial management include?

The restructuring of operations and potential injection of funds. Signup and view all the answers

Which factors differentiate judicial management from a scheme of arrangement?

Judicial management involves independent officers and removes powers from directors. Signup and view all the answers

What action can be taken despite a judicial management moratorium?

Filing writs for claims against a vessel Signup and view all the answers

Which of the following actions can judicial managers undertake?

Exercise powers as conferred upon directors Signup and view all the answers

What is the initial duration of a judicial management order by default?

180 days Signup and view all the answers

What is necessary for extending a judicial management order beyond the initial period?

A majority in number and value of creditors' approval Signup and view all the answers

Why are contractual set-off rights not affected by a judicial management moratorium?

They are considered self-help remedies Signup and view all the answers

What can judicial managers apply for concerning existing securities?

Super priority over existing assets Signup and view all the answers

Which action is prohibited for judicial managers regarding company debts at the time of the judicial management order?

Making payments to discharge debts Signup and view all the answers

In which scenario can a judicial management order be extended without a court order?

With the creditors' majority approval Signup and view all the answers

What is a characteristic limitation of the powers of judicial managers?

They cannot manage trust-held funds Signup and view all the answers

Which legislative reference outlines the principles regarding set-off rights during judicial management?

Section 96, Subsection 5 of the ERDA Signup and view all the answers

What is the prerequisite for a company to be placed into judicial management?

The company must be insolvent or likely to become insolvent Signup and view all the answers

What are the three statutory purposes outlined in Section 89 for judicial management?

Survival of the company, approval of agreements, and advantageous asset realization Signup and view all the answers

Under which circumstance will the court dismiss a judicial management application?

If a creditor with a floating charge over the company's assets objects Signup and view all the answers

What is the role of the public interest exception under Section 91 of the ERA?

It enables the court to override opposition if in the public interest Signup and view all the answers

In what cases was the public interest exception first raised?

Cosmetron Electronics and Rie Bintan Zegun Signup and view all the answers

Which of the following can oppose a judicial management application?

A person with a floating charge over the company’s assets Signup and view all the answers

What does the court have discretion to grant under Section 91 despite opposition?

Judicial management orders if it's in the public interest Signup and view all the answers

Why might a judicial management application not succeed?

If there is opposition from a creditor with special rights Signup and view all the answers

Which of the following is a potential outcome of a successful judicial management application?

An arrangement or compromise approved by creditors Signup and view all the answers

What is a critical factor that the court examines when considering a judicial management application?

The likelihood of achieving the company's survival as a going concern Signup and view all the answers

What can trigger the automatic statutory moratorium upon filing for judicial management?

Filing of an application for judicial management Signup and view all the answers

Which of the following statements is true regarding the appointment of judicial managers?

Only licensed insolvency practitioners can be appointed as judicial managers. Signup and view all the answers

What does an expanded moratorium entail after the grant of a judicial management order?

A prohibition against property forfeiture. Signup and view all the answers

Which of the following actions is restricted immediately after filing an application for judicial management?

Enforcing secured interests over company property Signup and view all the answers

What is one consequence of the court denying a judicial management application based on insufficient public interest?

Creditors can immediately enforce their claims. Signup and view all the answers

What is required before a company can pass a resolution to appoint an interim judicial manager?

Notice of meeting to discuss the resolution Signup and view all the answers

What happens to pending winding up applications once a judicial management order is granted?

They are dismissed. Signup and view all the answers

In the case of Bintan Lagoon Resort, what was the court's ruling regarding the appointment of judicial managers?

The mere threat of employee termination was insufficient for judicial management. Signup and view all the answers

What procedure is required when a court application for judicial management is made?

It should be supported by an originating summons and an affidavit. Signup and view all the answers

What is a new approach introduced for placing a company into judicial management?

Passing a shareholders' resolution to appoint an interim judicial manager. Signup and view all the answers

What action must judicial managers take if the purpose of the judicial management orders has already been achieved?

Apply to court for discharge of the judicial management orders Signup and view all the answers

Which of the following statements accurately describes the legal responsibility of a judicial manager with respect to liability?

Judicial managers can seek a release from liability but remain accountable for negligence and breach of duty. Signup and view all the answers

What can creditors do if they believe the judicial manager is managing the company's affairs in an unfairly prejudicial manner?

Apply to discharge the judicial management order or seek reliefs against the judicial managers. Signup and view all the answers

What is the primary purpose of the statement of proposals presented by the judicial managers to creditors?

To provide a roadmap towards rehabilitation without compromising claims. Signup and view all the answers

When can the statement of proposals be modified by the creditors?

During the initial meeting of creditors where it is presented. Signup and view all the answers

Study Notes

Judicial Management

Judicial management offers a chance for a company to recover or better sell its assets.
Moratoriums prevent proceedings and enforcement, giving time for restructuring.
Directors are replaced by independent professionals, transferring all director powers to the judicial manager.
The company must be insolvent or likely to become insolvent.

Insolvency Criteria

The applicant needs to show the order would likely achieve:
- Company survival (or part of it).
- Approval of a Section 210/s71 IRDA compromise or arrangement.
- More beneficial asset realization than in winding up.

Ways to Enter Judicial Management

Court Application (Sections 90-92 IRDA):
- Company or creditors apply to court if the company is or is likely to become unable to pay debts and rehabilitation is possible.
- Procedure involves a company (via resolution) or a director/creditor petitioning the court for a judicial manager under s91 IRDA.
- Supported by affidavit stating grounds.
Resolution of Creditors (Section 94 IRDA):
- Company, instead of a court application, can obtain a creditors' resolution to place it under a judicial manager.
- Conditions include determining if the company is in danger of default and showing a reasonable probability of one or more judicial management purposes.
- A meeting of creditors will determine if the company is under judicial management.

Power of Court to Appoint Judicial Manager

The court can appoint a judicial manager only if the company is unable to pay its debts and the order is likely to achieve judicial management purposes.
The court can dismiss if prejudice to a person appointing a receiver is disproportionate to unsecured creditors' prejudice.
The court can dismiss an application, hear conditional or unconditional adjournment, or make interim orders.
Specific companies (e.g., banking corporations) aren't eligible for judicial management.
Notice of the application should be published in the Gazette and a local newspaper.

Power of Court to Dismiss Applications

The application can be dismissed either if the appointment of a receiver or judicial manager is opposed, or if the prejudice to the applicant would be greater than the prejudice to unsecured creditors.

Judicial Manager Responsibilities

The judicial manager is an officer of the court, with powers and responsibilities outlined.
The judicial manager performs functions as quickly and efficiently as possible.
The judicial manager must report to the court and file reports on the progress of judicial management.
The judicial manager is responsible to act in the interests of creditors. There is an automatic moratorium on all actions against the company.
The judicial manager must be appointed by a resolution of the company's creditors if the company considers itself unable to pay its debts.
The appointment will be in accord with specific requirements outlined in the relevant legislation.

Interim Judicial Manager

The court can appoint an interim manager before making a final judicial management order.
The appointment follows specific criteria similar to judicial managers, with additional considerations for the interim judicial manager.

Conditions for Appointment of Interim Judicial Manager

Authorization via a resolution or a company's constitution or a board’s resolution.
Sufficient notice period (7 days).
Consent of the person or persons notified.
The interim judicial manager should be a qualified insolvency practitioner, not the company auditor.
A declaration from the judicial manager confirming they have no conflicts of interest.

Judicial Manager Term

The judicial manager's term ends when the earlier of the following events occur:
- The expiry of 30 days from the appointment date or any extension allowed.
- A judicial manager has already been appointed.
- The creditors in a meeting reject the placing of the company under judicial management.

Meeting of Creditors

The company must convene a creditors' meeting within a timeframe to discuss and resolve placing it under judicial management.
Notice of the meeting (at least 14 days) to all creditors and publishing in a newspaper with statements of company's affairs is mandatory.
Approval by a majority in value and number of creditors is required for judicial management to occur, and appointment of the judicial manager.

Additional Points

Judicial management exists to achieve specified purposes, with a focus on company survival, compromise acceptance, and improved asset realisation.
This process is regulated to protect creditors and promote orderly resolution.
The judicial manager is an officer of the court with specific powers, responsibilities, and restrictions.
Any person with an interest in a company's floating charge must be notified of a judicial management application.

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Description

This quiz covers the concepts of judicial management, including its role in company recovery and asset realization. It explores the criteria for insolvency and the processes involved in entering judicial management through court applications. Test your understanding of these important legal frameworks.