B24 INV - Cross Border Past Paper PDF

B24 INV - 1\. LIQUIDATION - \(a) Overview of Liquidation - Part 8 of the IRDA Commencement of Winding Up: Sections 126 and 161(6) of the IRDA A winding up is usually a **[last resort]** because it ends up in the dissolution o...

B24 INV - 1\. LIQUIDATION - \(a) Overview of Liquidation - Part 8 of the IRDA Commencement of Winding Up: Sections 126 and 161(6) of the IRDA A winding up is usually a **[last resort]** because it ends up in the dissolution of a company. \(b) Winding Up by the Court (**[Compulsory]**) - \[Odelia\] Advantages/ Disadvantages of winding up - Advantages - Disadvantages - - - - Locus Standi: **[Section 124 of the IRDA]** - - - **[Who]** can apply? - - - - - - - - - **[Procedure]** - Court's discretion to decline to grant winding up order: Section 128 of the IRDA Grounds - \(i) Inability to pay debts / Test for Insolvency - **[3 ways]** to establish **[inability to pay debts]** - Sections 125(1)(e) and 125(2) of the IRDA Judgement or decree Failur to meet Statutory demand: s125(2) IRDA \> 15,000 - - - - Cashflow insolvency test vs Balance sheet insolvency test: Sun Electric Power Pte Ltd v RCMA Asia Pte Ltd \[2021\] SGCA 60 a. b. c. d. e. f. g. h. - \(ii) Presumption of Insolvency - Section 125(2) of the IRDA - 3 weeks from service of statutory demand (**[not letter of demand]**) - **[Was the option to compound provided?]** BNP Paribas v Jurong Shipyard Pte Ltd \[2009\] 2 SLR(R) 949 - \(iii) Disputing a debt on substantial grounds - BNP Paribas v Jurong Shipyard Pte Ltd \[2009\] 2 SLR(R) 949 - Metalform Asia Pte Ltd v Holland Leedon Pte Ltd \[2007\] 2 SLR(R) 268 - Mohd Zain bin Abdullah v Chimbusco International Petroleum (Singapore) Pte Ltd \[2014\] 2 SLR 446 - **[Both types]** of voluntary liquidation are **[commenced by the company]**. - \(c) **Members' Voluntary** Winding Up (Solvent liquidation) - Sections 160 to 165 of the IRDA - s160 - \>75% - - - s161 - - - s162 - s163 \> 12 months after commencement of winding up - s164 - at least one or more liquidator - s165 - If the liquidator is of the view that the company is unable to pay its debts, then call creditor\'s meeting - \(d) **Creditors' Voluntary** Winding Up - Sections 160 to 163, and 166 to 170 of the IRDA - s160 s161 s162 - To cease to carry on its business - s163 - Members' voluntary winding up when company is still solvent - s166 - 10 days notice of the meeting of creditors - s167 - Company can choose the liquidator - - - - - - - - - s168 - Director\'s affidavit to concurr in the statement of affairs - s169- committee of inspection appointed to represent the interest of the creditor as a whole - s170 - any disposal or disposition of property, post winding-up is void. - \[Odelia\] Members v Creditors winding up - depends on whether the company is solvent or insolvent - - - - - \(e) Effect of Winding Up - \(i) Moratorium on legal and enforcement proceedings - **[ Court Winding Up]**: Sections 129, 130, and 133 of the IRDA - s129 - Court may stay or restriant proceedings against wuond up company - s130 - Avoidance of dispositions by wound up company - s133 - No action to be commenced against company - - - Section 206 of the IRDA and Section 334 of the Companies **[creditors cannot retain the benefit of uncompleted execution]** - Functus Officio - The Liquidator and remuneration - Statement of Affairs - Members' Creditors' Voluntary Winding Up: Sections 162 and 170 of the IRDA - s162 - restriction against share transfer and alteration in the member\'s status - s170 - No enforcement against estate and no action against company - \(i) Provable Debts - Section 218(1) & (2) of the IRDA - - - - s218(3)-(8) - Insolvency set-off: Section 219 of the IRDA - - - - - - Interest on debts: Section 222 of the IRDA - - - Insolvency set-off: Law and Practice of Corporate Insolvency (2014, LexisNexis), Chapter VI \[1905 -- 2101\] - What happens in a regular set-off? What happens in an insolvency set-off? conversion date for foreign currency claims - \(h) The Pari Passu Principle of Distribution - Section 172 of the IRDA - **[Pari Passu]** - **[Preferential payments]** and priorities amongst **[unsecured debts]**: Section 203 of the IRDA 1. 2. 3. 4. 5. c. d. e. - What happens if there are insufficient assets to pay everyone? - Estate Costs Rule - Halsbury's Laws of Singapore on Insolvency, Volume 13 (2013 Reissue, LexisNexis Singapore), \[150.456 - 150.472\] - \[150.456\] Creditor\'s position prior to commencement of liquidation (Creditors to avoid claw back clauses) - \[150.457\] The pari passu principle - \[150.458\] Priority of payment - \[150.459\] Estate costs rule - \[150.460\] All costs and expenses of winding up (Top priority) - \[150.461\] Payment for costs without the need for passing - \[150.462\] Liquidator to bear costs proceedings - \[150.463\] All wages and salaries (2nd) - \[150.464\] All amounts due to an employee (3rd) - \[150.465\] All amounts due in respect of workmen\'s compensation (4th) - \[150.466\] All amounts due in respect of contributions payable (5th) - \[150.467\] All remuneration payable to any employee in respect of vacation leave (6th on the list) - \[150.468\] Amount of all tax assessed (penultimate on the list) - \[150.469\] Sums payable to employee under the Employment Act - \[150.470\] Insufficiency of funds to meet all debts (floating charge) - \[150.471\] Priority to third parties entitled to insurance - 150.472 Assets recovered under an indemnity for costs of litigation - 150.473 Position of unsecured creditors - Liquidator dissolution and release - 2\. BANKRUPTCY - \(a) Bankruptcy Proceedings - \(i) **[Who]** can make a bankruptcy application Creditor's application: Section 307 of the IRDA Debtor's application: Section 308 of the IRDA - - \(ii) Conditions to be satisfied in respect of debtor - Does the Court have **[jursidiction]** over the debtor? - Section 310(1) of the IRDA - - - - - - - - - - **[Grounds]** for bankruptcy application: Section **** of the IRDA (**[\$15,000]**) - - - - - - **[Presumption]** of inability to pay debts: Section 312 of the IRDA - Statutory demand: Section 312(a) of the IRDA - Expediated procedure (Section 3.1 IRDA) - **[Effect]** of bankruptcy Order - **[Alternatives to bankruptcy]** - \(v) **[Debt Repayment Scheme \ - - - Prescribed limit for Debt Repayment Scheme: Section 289(2)(a) of the IRDA, and Regulation 4 of the Insolvency, Restructuring and Dissolution (Debt Repayment Scheme) Regulations 2020 - - - - - - \(b) **[Individual Voluntary Arrangement- for large business debts]** - Is there a moratorium ? Part 14 of the IRDA (a general understanding of what the Individual Voluntary Arrangement is will be sufficient) - - Application / Nominee appointed as supervisor - \(c) Bankruptcy Administration - Official Assignee / **[Private Trustee in Bankruptcy (PBIT)]** is **[mandatory]** - Remuneration Rule 47 IRDA - Administration of Bankrupt\'s property s327 IRA - \(iii) Duties of Bankrupt - General **[duties of the Bankrupt]**: Section **** of the IRDA - - - - - - - - - - - - - - - - File Statement of Affairs - s332(1) IRDA Submit accounts as and when directed by OA - s333 IRDA - \(iv) **[Restrictions]** against Bankrupt - Sections 400, 401 and 412 of the IRDA - s400 - Bankrupt is **[disqualified]** - s401 - Bankrupt **[not to leave Singapore]** - s412 - **[limits of liability]** - Bankrupt cannot be director of company: section 148(1) of the Companies Act ([This is a strict liability offence]) - \(d) Discharge or annulment of bankruptcy - **[4 ways]** to case being a bankrupt - \[1\] **[Annulment]** under Sections 392 to 395 of the IRDA - s392 - Court\'s power to annul bankruptcy order - - - s393 - Powers of the OA - \[2\] Composition or scheme of arrangement by **[special resolution]** : s357 IRDA - \[3\] OA\'s application to court s394 IRDA - \[4\] Discharge by OA\'s certification s395 IRDA - s396 IRDA **[Factors]** for OA\'s certificate - Factors Where bankrupt is not repeat bankrupt s395(2)(a)(i) IRDA - **[Effect]** of discharge: Section 397 of the IRDA - - - - - - - 3\. JUDICIAL MANAGEMENT - Judicial management offers the **[prospects of recovery]** for the company or a better realization of assets. - Test for insolvent or likely to become insolvent Crtieria for JM order to be made s89(1)(a) to (c) IRDA - **[Three Statutory purposes]** - \(a) Judicial Management Proceedings - **[Two- ways]** to place a complay into JM - **[\[1\] Court Application]**: Sections 90 to 92 of the IRDA - - s91 power of the court to appoint the Judicial Manager - s91(4) Notice of Application to be published in gazette - s91(5) - Holder of floating charge to issue notice of application - **[s91(6)]** - JM **[must be dismissed]** if prejudicial to unsecured creditors, unless against public interest exception applies s91(10) IRDA - Public interest exception **[s91(10) IRDA]** - ▪ Re Cosmotron Electronics (Singapore) Pte Ltd - ▪ Re Bintan Lagoon Resort Ltd - s92 Power of Court to appoint interim judicial manager - **[\[2\]]** **[Resolution of Creditors]**: Section 94 of the IRDA - - - - s94(1) - Grounds for obtaining a resolution of creditors for JM - - - - s94(2) - 7 days Notice to Appoint Interim Judicial Manager - s94(3) - Conditions for appointing **[interm]** judicial manager - - - - - - - - s94(4) - Duties and powers of interim judicial manager - - - - s94(5) - Notice of Appointment of interim judicial manager - - - s94(6) - Term of Interim Judicial Manager - - - s94(7) - Creditor\'s Meeting to appoint judicial manager \ - s94(8) - 14 days written notice to creditors and publishing in newspaper - - - - s94(9) - One director must attend - s94(10) - Company secretary to attend the meeting - s94(11) - **[Majority of number and value]** of creditors must approve JM - - - - - - s94(12) - JM must be licensed - s94(13) - **[JM must not be appointed]** - - - - - - - Conditions to satisfy to apply for judicial management: Section 90 of the IRDA - - **[Effect]** of JM - \(i) Aims of Judicial Management - Section 89 of the IRDA - Three purposes of the Judicial Manager - \(b) Administration of Judicial Management - \(i) Effect of filing of application Judicial Management Application and Judicial Management Order - Statutory Moratorium **[s95 IRDA]** - s95 - **[Automatic]** interim moratorium - - - - - - - - s66 - **[Final]** Moratorium - - - - - **[Set-off rights]** still in effect **[s96(5) IRDA]** - ▪ Electro Magnetic (S) Ltd v DBS - ▪ Altus Technology Pte Ltd (under judicial management) v OCBC - Expanded moratorium **[s96(4) IRDA]** - Extension of JM **[s111(3) IRDA]** - Judiucial Manager Powers **[s99 IRDA and first schedule]** - Judicial Manager cannot - Juidical Manager can - Discharge s112 IRDA - Court\'s power to relief Judicial Manager (**[s115 IRDA]**) - Statement of proposals within 90 days **[s107 IRDA]** - 4\. AVOIDANCE OF ANTECEDENT TRANSACTIONS - It is important to be aware of the relevant time periods for challenging transactions and the elements required to establish a claim. \(a) Unfair or Undue Preference (UUP) - **[Requirements]** - Section 224 of the IRDA - s224(1) - Company is in JM/WU + relevant time - s224(2) - Court may restore the transaction as if not entered into - s224(3) - Transaction UV is no consideration or less monies worth - - - s224(4) - Good faith defence - - - **[ Relevant time]**: Section 226 of the IRDA - s226(1)(a) - **[relevant time is 1 year for unrelated and 2 years for connected]** - s226(2) - requirement of unable to pay debts - s226(3) - TUV entered into with **[connected person]**, - s225(5), 362(5) IRDA **[Presumption of "influenced by desire to prefer\"]** - Progen Engineering \[2010\] 4 SLR 1089 - DBS Bank v Tam Chee Chong - - - Rabobank v Jurong Technologies Industrial Corp Ltd \[2011\] 4 SLR 977 - s226(4) - TUV if entered commencement of JM - s226(5) - \'relevant time\' alternative period - s226(6) - Additional relevant time periods - Extent of orders that can be granted by Court: Section 227 of the IRDA - Liquidators of Progen Engineering Pte Ltd v Progen Holdings Ltd \[2010\] 4 SLR 1089 - **[Respondant cannot simply deny the existence of desire to prefer to rebut the presumption]** - \(b) Transaction at an undervalue (TUV) - Requirements (s224 & s361 IRDA) - Section 225 of the IRDA - s225(1) - Company in JM or WU - s225(2) - Court may restore transaction - s225(3) - UP = guarantor, better position - s225(4) - Y must have desired to prefer X - What is the test? - s225(5) - unfair presumption if Y is connected to X, unless contrary is shown - s225(6) - Court order is not immunity - **[ Relevant time]**: Section 226 of the IRDA - s226(1)(a) - \ - There must be coincidence of temporal and financial element - s226(2) - requirement of unable to pay debts - s226(3) - TUV entered into with **[connected person]**, - s226(4) - TUV if entered commencement of JM - s226(5) - \'relevant time\' alternative period - s226(6) - Additional relevant time periods - Meaning of \"**[Transaction]**\" - Defence **[s224(4) IRDA]** - Void Disposition **[s130 IRDA]** - Cheo Sharon Andriesz v Official Assignee of the estate of Andriesz Paul Matthew \[2013\] 2 SLR 297 - QCD Sdn Bhd v Wah nam Plastic Industry Pte Ltd \[1997\] 1 SLR(R) 270 - Floating Charges **[s229 IRDA]** - Extent of orders that can be granted by Court: Section 227 of the IRDA - Rothstar Group Ltd v Leow Quek Shiong \[2022\] SGCA 25 - [ **Court may reverse the TUV by discharging the legal mortgage. It cannot deem TUV void or voidable.**] - \(c) Fraudulent Trading - There must be **[intent to defraud]** Section 238 of the IRDA - Responsibility for fraudulent trading - - - - - - Tang Yoke Kheng (trading as Niklex Supply Co) v Lek Benedict and others - \(d) Wrongful Trading **[s239 IRDA]** - No requirement for criminal conviction Wrongful means no reasonable prospect Section 239 of the IRDA - Responsibility for wrongful trading +-----------------------------------+-----------------------------------+ | **Elements** | **S 239(12) IRDA**: Company (Y) | | | trades wrongfully if -- | | | | | | - | | | | | | [of meeting them in | | | full]; or | | | | | | - | | | | | | o  (i) that it has [no reasonable | | | prospect of meeting in | | | full;] and | | | | | | o  (ii) **that | | | [resulted] in** | | | company becoming insolvent. | +===================================+===================================+ | **Criminal liability** | **S 239(6) IRDA**: Where company | | | has traded wrongfully, every | | | person who was party to it and | | | who -- | | | | | | - - | | | | | | is to be **[guilty of | | | offence] **and liable | | | on conviction to fine not more | | | than \$10,000 / imprisonment for | | | term not more than 3 years / | | | both. | +-----------------------------------+-----------------------------------+ | **Who** | **S 239(5) IRDA**: Following | | | persons may apply under (1) -- | +-----------------------------------+-----------------------------------+ | **may apply?** | - - - - | | | | | | o (i) judicial | | | manager/liquidator; or | | | | | | o (ii) Court. | +-----------------------------------+-----------------------------------+ | **Guidance from Court** | **S 239(10) IRDA**: Any company / | | | (with company's consent) any | | | person **[may apply to Court for | | | declaration] **as to | | | [whether particular course of | | | conduct, transaction or series of | | | transactions at time of and after | | | application would constitute | | | wrongful trading]. | +-----------------------------------+-----------------------------------+ | **Defence** | **S 239(2) IRDA**: Court may | | | relieve (in whole/part) person | | | declared responsible from | | | personal liability if -- | | | | | | - - | | | | | | personal liability. | +-----------------------------------+-----------------------------------+ | **Civil liability** | **S 239(1) IRDA**: If, in course | | | of judicial management/winding | | | up, it appears that company (Y) | | | has traded wrongfully, Court, on | | | application of any person in (5), | | | may declare that **any party to | | | trade is [personally | | | responsible] for | | | all/any of debts/other | | | liabilities of Y if he** -- | | | | | | - - | | | | | | wrongfully. | | | | | | **S 239(3) IRDA**: Court may make | | | additional orders with regards to | | | declaration in (1) -- | | | | | | - | | | | | | o (i) on any debt/obligation due | | | from company to person liable; or | | | | | | o (ii) on any charge / interest | | | in any charge on any assets of | | | company held | | | | | | - - - | | | | | | | | | | | | - | | | | | | \(c) provision for sums received | | | to be paid to such | | | persons/classes of persons. | +-----------------------------------+-----------------------------------+ - Defence of honesty s239 IRDA - 5\. SCHEMES OF ARRANGEMENT - \[Odelia\] Difference between JM and SOA? - - - - \(a) Objective and Purpose of Scheme - - - - - - **[Requirements]** for SOA s210 of the Companies Act - - - Overview of the various stages of a scheme application and applicable tests: The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appeal \[2012\] 2 SLR 213 - - - - - \(i) **[Who]** can apply - Section 210(2) of the Companies Act - - - - - - - - - \(ii) Interim Moratorium - **Automatic interim moratorium**: Section 64 of the IRDA - Duration - **[Scope]** of the moratorium - Requirements - Conditions - Notice of Application - Documents to be submitted - Company to furnish financial information - Extension of duration - Discharge / Variation - \(b) Convening the Scheme Meeting - Application to **[Court for Leave]** to convene meeting O38r2(1) - The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v. TT International Ltd and another appeal \[2012\] 2 SLR 213 - Pathfinder Strategic Credit LP v Empire Credit Resources Pte Ltd \[2019\] 2 SLR 77 - **[After Leave]** is granted by Court to convene creditor\'s meeting - Sections 210(1) and 211 of the Companies Act - Notice of the meeting and explanatory statement - Contents of the explanatory statement must be full and frank - \(i) **[Classification]** of creditors - **[ Dissimilarity principle]**: The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v. TT International Ltd and another appeal \[2012\] 2 SLR 213 - Test - scheme is overall fair and equitable to each dissenting class - Possible classes of creditors - Pathfinder Strategic Credit LP v Empire Credit Resources Pte Ltd \[2019\] 2 SLR 77 - \(ii) **[Voting]** on the proposed scheme - **[ Threshold of creditor support required]**: Section 210(3AB) of the Companies Act Majority in number of each class of creditors representing three-fourths in value present and voting - - - \(c) Court approval of the Scheme - \(i) **[Factors]** that the Court takes into consideration - - - - The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v. TT International Ltd and another appeal \[2012\] 2 SLR 213 - - - - - Pathfinder Strategic Credit LP v Empire Credit Resources Pte Ltd \[2019\] 2 SLR 77 Wai Wen Electrical Engineering - **[Effect]** of SOA approval - **[Termination]** of the SOA - 6\. CROSS-BORDER ASPECTS OF INSOLVENCY LAW & RESTRUCTURING - \(a) Winding Up of Foreign Companies - \" Part 10 of the IRDA \" Substantial connection with Singapore: Sections 246(1)(d) and 246(3) of the IRDA - s246(1)(d) - there must be a **[substantial connection]** with Singapore - s246(3) - Factors of substantial connection with Singapore - - - - - \(b) Recognition of Foreign Insolvency & Restructuring Proceedings - \" Third Schedule of the IRDA: UNCITRAL Model Law on Cross-Border Insolvency Powers of a foreign liquidator or insolvency office holder in Singapore; - No requirement of reciprocity. - What is the COMI? - Rebuttal presumption - The **[Zetta Jet factors]** in determining COMI - Why is the COMI important? - Foreign main proceeding = recognition order provides **[automatic relief]**. Foreign non-main = powers and reliefs are **[subject to discretion of the Singapore courts]** - **[Courts must be satisfied that interest of creditors are protected (Art 22)]** - Re Opti-Medix Re Tai Soo Suk (Hanjin Shipping) and Beluga Shipping. - Jurisdiction of the Singapore Courts to make a winding up order **[against a foreign company]**; - **[Requirements]** - Administration of a foreign company's assets (where that foreign company has been placed in liquidation in Singapore) by the Singapore liquidator; and - Invocation of local restructuring legislation to aid a foreign insolvency process.