In March this year, the High Court in Beluga Chartering1 addressed a unique provision of Singapore's Companies Act that requires local liquidators to ring-fence a foreign company's assets for the settlement of the debts it incurred in Singapore before they transmit its assets to overseas liquidators and creditors. This decision exploring the implications of section 377 on Singapore's cross-border insolvency legal framework is timely considering the ongoing review of Singapore's insolvency laws.
A summary of the factual background
The term “globalisation” is associated with expansion and the free movement of capital and resources. Funds raised in Country A can be invested in a variety of different countries for better returns. In times of economic expansion, it can be unfashionable to consider insolvency issues. This may explain why insolvency practitioners find themselves holding many discussions among themselves.
The Ministry of Law (“MinLaw”) is conducting a public consultation on key recommendations made in a final report by the Insolvency Law Review Committee ( the “Committee”) in relation to Singapore’s personal and corporate insolvency regimes. The public consultation period runs from 7 October 2012 to 2 December 2013.
Alvin Yeo SC and Melvin Lum acted for the Second Intervener, Thomas Chan, in his claim for $3,275,935.81 as interest for the late completion of the sale of a property ("Property").
The liquidators of the plaintiff Dynasty Line Ltd. ("Dynasty") brought proceedings against the first defendants ("Sia") and second defendant ("Lee") for breaches of duty owned to Dynasty while they were its directors.
When goods are delivered to a professional storage operator (we will refer to them as a warehouseman) for safe keeping, they may become subject to a lien. A lien is a security right which gives the warehouseman rights over the goods that can take precedence over the rights of others, including the owner. The warehouseman is entitled to exercise the lien when he or she is left unpaid for services rendered and in so doing will gain legal control over the goods.
Beluga Chartering GmbH (in liquidation) & Ors v Beluga Projects (Singapore) Pte Ltd (in liquidation) & Anor (deugro (Singapore) Pte Ltd, non-party) [2014] SGCA 14
The theory of universality in insolvency, along with globalisation, has gained much traction across many jurisdictions in recent years. Briefly, the universality theory proposes that an insolvency proceeding has worldwide effect over all the assets of the insolvent company, wherever they may be.
Introduction
When an unregistered foreign company becomes insolvent in both its place of incorporation and in Singapore, should its assets in Singapore be remitted to the foreign liquidator or be held in Singapore to satisfy locally incurred liabilities first? This was the question that the Singapore Court of Appeal faced in Beluga Chartering GmbH (in liquidation) and others v Beluga Projects (Singapore) Pte Ltd (in liquidation) and another (deugro (Singapore) Pte Ltd, non-party) [2014] SGCA 14.
Facts
On 6 May 2014, the Ministry of Law ("MinLaw") issued its response to the feedback received from the public consultation on the final report (the "final report") of the Insolvency Law Review Committee (the "Committee") in relation to proposed recommendations affecting Singapore's personal and corporate insolvency regimes.