Manharlal Trikamdas Mody E Anor v Sumikin Bussan International (HK) Limited [2014] SGHC 123

The Singapore High Court in the case of Manharlal Trikamdas Mody E Anor v Sumikin Bussan International (HK) Limited [2014] SGHC 123 decided a number of important issues in the fields of bankruptcy, assignment and ex parte applications.

Court’s power to summon persons connected with company in liquidation

Under section 285 of the Companies Act of Singapore (Cap 50, 2006 Rev Ed), when a company is in liquidation, the Court may summon before it any person whom the Court considers capable of giving information concerning the promotion, formation, trade dealings, affairs or property of the company. Such person may be examined on oath regarding the above-mentioned matters and the Court may also require him to produce any books or papers in his custody or power relating to the company.

The Singapore High Court in Parakou Shipping Pte Ltd (in liquidation) v Liu Cheng Chan & Orsgranted an application by a company in liquidation for a Mareva injunction to restrain its former officers and other companies which they controlled from dissipating assets. The court also considered the question of whether the company in liquidation acted with sufficient urgency and diligence in commencing the action and applying for the Mareva injunction.

The parties

Between 16 January 2015 and 24 February 2015, the Ministry of Law (the “MinLaw”) conducted a public consultation to seek feedback on proposed amendments to the Bankruptcy Act (the “Act”) which principally sets out Singapore’s bankruptcy regime. Set out below is a summary of the key proposed amendments.

Institutional creditor must appoint private trustee

On 11 May 2015, the Bankruptcy (Amendment) Bill 2015 (the “Bill”) was tabled in Parliament for first reading. Essentially, the Bill seeks to amend the Bankruptcy Act to create a more rehabilitative regime for bankrupts, ensure better utilisation of public resources and encourage creditors to exercise financial prudence when extending credit.

In a judgment handed down on 9 June 2015, the High Court of Singapore has for the first time approved a litigation funding arrangement for the benefit of a company in liquidation.

Summary

The key points arising from the judgment are:

The liquidator of a company has an obligation to find out what led to the company’s failure, and take steps to maximise recovery for the company’s creditors. He is usually a stranger to the company’s business, and starts off at a disadvantage, having no prior knowledge of the company’s affairs, and usually incomplete and unsatisfactory records. He also has to deal with previous directors and officers of the company who are often uncooperative and may themselves be complicit in the company’s demise.

On 7 November 2014, OW Bunker A/S (“OW”), a global supplier and trader of marine fuel, filed for bankruptcy in Denmark. Further bankruptcies of OW subsidiaries and affiliates swiftly followed, including the bankruptcy of certain U.S. and Singapore-based OW entities.

Dispute Resolution Singapore Client Alert July 2015 Singapore High Court determines proprietary interests of customers of insolvent brokerage firm, MF Global Singapore Pte Ltd In the latest instalment arising out of the insolvency of MF Global, the Singapore High Court had to decide whether certain customers of the insolvent brokerage firm had any proprietary interests in the assets of the firm, and whether these assets were held on trust for these customers.

Introduction

On 14 July 2015, the Singapore Parliament passed the Bankruptcy Amendment Bill, which seeks to establish certain reforms in Singapore’s bankruptcy regime.

Senior Minister of State for Law Indranee Rajah said in Parliament that the changes address the striking of a balance between the need to hold bankrupts accountable and allowing them to have the opportunity to make a fresh start in their financial affairs after a reasonable period of time.

In this Update, we highlight key aspects of these reforms, which include: