Introduction

The Singapore High Court has confirmed that it will recognize the status and powers of a foreign liquidator in the liquidation of an unregistered foreign company in Singapore.

Life cycle of a company

Statistics from the Accounting and Corporate Regulatory Authority ("ACRA") of Singapore reveal that the increasing number of companies formed in Singapore (2004:17,151; 2009:26,414) is matched by a corresponding increase in the number of companies ceasing operations (2004:5,882; 2009:22,388).

The Insurance (Amendment) Bill 2011 (the "Bill") was passed in Parliament on 11 April 2011.

Introduction

An unfair preference transaction will only be voided under the Companies Act if it is influenced by a desire to prefer the receiving party in the event of insolvency, and not if it is motivated by proper commercial considerations. In Tam Chee Chong and another v DBS Bank Ltd [2010] SGHC 331, the Singapore High Court had the opportunity to consider what constitutes proper commercial considerations.

Where a plaintiff sought to claw-back payments made to the defendant on the basis that they amounted to an unfair preference, or a transaction at an undervalue, or had been made with intent to defraud, held that such a claim could not be arbitrated but had to be dealt with in court proceedings:

Lee Eng Beng SC, Nigel Pereira and Jonathan Lee from the Business Finance and Insolvency Practice of Rajah & Tann LLP successfully represented the Appellant in Chee Yoh Chuang and Anor (as Liquidators of Progen Engineering Pte Ltd) v Progen Holdings Ltd [2010] SGCA 31.

Payments made by a company to its holding company shortly before its winding up were held to have amounted to an unfair preference of the holding company and could be clawed-back from it

The Singapore High Court has considered for the first time whether an action brought to avoid transactions that allegedly violated insolvency laws should be stayed in favour of arbitration. The court held that such disputes are not suitable for arbitration due to the public interest involved.

In Econ Piling Ltd v Sambo E&C Pte Ltd [2010] SGHC 120, the Singapore High Court rejected the proposition that where a debtor is released from its debts, its other joint-debtors are also automatically released.

The Singapore Court of Appeal decision of Chee Yoh Chuang & Anor (as Liquidators of Progen Engineering Pte Ltd (in liquidation)) v Progen Holdings Ltd considered how the lawought to balance the rights of creditorswith the companies directors' desire to keep the company afloat when the company has financial difficulties and when payments were made to creditors.

In an application by Win-Win Aluminium Systems Pte Ltd (the
“Company”) pursuant to section 210 of the Companies Act, the Company
sought an order to convene a meeting of creditors for the purposes of
approving a scheme of arrangement.