2010 saw many important legal developments in the area of business finance & insolvency law both internationally as well as in Singapore.
In Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) v Larsen Oil and Gas Pte Ltd [2010] SGHC 186 the Singapore High Court considered whether an action brought to avoid transactions that allegedly violated insolvency laws should be stayed in favour of arbitration.
The case of Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) v Larsen Oil and Gas Pte Ltd [2010] SGHC 186 (“Petroprod Ltd”) is significant as the Singapore High Court decided that claims which arise from avoidance provisions in Singapore insolvency laws are non-arbitrable as they exist for the benefit of the general body of creditors as a whole.
In Pacific King Shipping Pte Ltd & Anor v Glory Wealth Shipping Pte Ltd, one of the key issues which the Singapore High Court had to consider was whether the defendant was precluded from commencing winding up proceedings against the plaintiffs via section 254(2)(a) read with section 254(1)(e) of the Companies Act (the “CA”) on the basis of a debt that was founded on a foreign arbitration award which had not been enforced.
When a company enters financial difficulty, it faces conflicting interests. On the one hand, it must continue with commercial transactions to preserve and hopefully rehabilitate the company; on the other, it must respect its creditors’ rights by not making payments which may be seen as preferring certain creditors.
The case of Norwest Holdings Pte Ltd (in liquidation) v Newport Mining Ltd [2010] SGHC 144 involved
the sale of the shares of a company which owned phosphate mining and production facilities in the
Sichuan province.
InEcon Piling Pte 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 debt, its other joint-debtors are also automatically released.
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.