AAR and another v AAS (liquidator and trustee of B and others) and others

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: Andrew Ang J
• Judgment Date: 08 June 2009
• Neutral Citation: [2009] SGHC 139
• Citation: [2009] SGHC 139
• Subject Matter: Variation,Whether variation sought led to true preservation of status quo,Interlocutory injunction,Injunctions
• Date: 08 June 2009
• Plaintiff Counsel: Andre Yeap SC and Dawn Tan (Rajah & Tann LLP) and Ng Lip Chih (NCL Law Asia LLP)
• Defendant Counsel: Chua Beng Chye and Ng Yeow Khoon (KhattarWong)
• Published date: 10 June 2009
• Docket Number: Originating Summons No 1309 of 2008 (Summons No 390 of 2009)

8 June 2009

Andrew Ang J:

1 This is an application by the second respondent for a further variation of an order of court granting an injunction in favour of the applicants dated 14 October 2008 as varied by an order of court dated 24 October 2008 granted by Tay Yong Kwang J. In the current application, the second respondent sought an order for the applicants to remit the sum of 1 billion Philippine pesos (“PHP 1bn”) to the second respondent’s designated account pending the resolution of a dispute between the parties in ongoing arbitration proceedings failing which the injunction would stand discharged.

The facts

2 The first respondent is the liquidator and trustee of [B], a company incorporated in the Philippines that was declared bankrupt in 2000. [B]’s steel plant located in the [XXX], Philippines, was closed as a result. In December 2002, pursuant to a liquidation plan, the first respondent was appointed as liquidator and trustee for [B]. The third to twenty-fifth respondents are [B]’s secured creditors (“the Secured Creditors”). The twenty-sixth to twenty-eighth respondents are [B]’s shareholders. The second respondent was appointed to act as Collateral Trustee and/or Facility Agent on behalf of the Secured Creditors. Together with the first respondent, the Secured Creditors issued a global invitation to tender for [B]’s assets. [C], the applicants’ holding company, submitted a successful bid for various [B] assets. [C] incorporated the applicants as special purpose vehicles for the purpose of purchasing and holding those assets.

3 The purchase of [B]’s assets was effected under an Asset Purchase Agreement (“the APA”) which provided for a purchase price of PHP 13.25bn (“the Purchase Price”). The payment terms of the APA were as follows:

(a)	Down payment:	PHP 1bn;
(b)	Tranche A Note:	PHP 2bn over the next five years; and
(c)	Tranche B Note:	PHP 10.25bn over the next eight years.

4 The timeline for payment of the instalments were as follows:

Due Date	Payment Amount
15 October 2004	PHP 1bn
15 October 2006	PHP 250m
15 October 2007	PHP 250m
15 October 2008	PHP 500m
15 October 2009	PHP 1.75bn
15 October 2010	PHP 1.75bn
15 October 2011	PHP 1.75bn
15 October 2012	PHP 6bn

5 Additionally, the Tranche A and Tranche B Notes were governed by an Omnibus Agreement dated 15 October 2004 (“the Omnibus Agreement”). As security for all of the applicants’ obligations to the Secured Creditors, the applicants agreed to provide Standby Letters of Credit (“SBLCs”) under various terms in the APA and the Omnibus Agreement. The SBLCs were essentially security for the instalment payments to be made by the applicants towards the Purchase Price. Each of the SBLCs was to have a validity of one year and ten business days from the date of its issuance. The timeline for the applicants to provide the SBLCs under the APA and the Omnibus Agreement were as follows:

Due Date	SBLC Amount
15 October 2004	PHP 250m
15 October 2005	PHP 500m
15 October 2006	PHP 750m
15 October 2007	PHP 750m
15 October 2008	PHP 1bn
15 October 2009	PHP 1bn
15 October 2010	PHP 1bn
15 October 2011	PHP 1bn

6 Accordingly, by 15 October 2008, the applicants were to:

(a) make payment for the October 2008 instalment of PHP 500m; and

(b) furnish a fresh SBLC for PHP 1bn to secure the next instalment due on 15 October 2009.

However, a dispute between the parties arose in relation to the transaction. The applicants alleged that the respondents were in breach of their obligation under the APA to deliver the [B] assets to the applicants free and clear of all liens of any kind or nature whatsoever. The applicants claimed that the respondents’ failure to pay the accrued taxes in relation to the APA had resulted in some of the [B] assets being subject to a lien by the [XXX]. Arbitration proceedings were commenced to resolve this dispute. In light of these developments, the applicants filed an urgent application on 9 October 2008 in the Philippines courts seeking injunctive relief against the first and second respondents to prevent the latter from calling upon the applicants to carry out their obligations under the APA and the Omnibus Agreement. The Philippines court denied this application. On 13 October 2008, the applicants filed an ex-parte originating summons in the Singapore courts seeking largely the same injunctive relief and this was granted on 14 October 2008 (“the Injunction”). The pertinent terms of the Injunction are as follows:

1.	[It is ordered that the Respondents,] jointly and severally, be restrained and/or enjoined by way of an injunction ... from:
	…
	(4)	exercising all other legal rights and remedies which may now or hereafter be available to them under the Applicable Law, as defined in Article 1.1 of the APA,
	for and/or in relation to the following:
	(5)	the non-payment of the 2008 Instalment by the due date, i.e. 15 October 2008;
	(6)	the failure to provide a standby letter of credit for the sum of 1 billion Philippine pesos ... as security for payment of the next instalment falling due on 15 October 2009 (“the 2009 Instalment”); and/or
	(7)	the failure to increase the value of the Existing [SBLC] to secure payment of the 2009 Instalment,
	until such time as the dispute between the parties relating to or in connection with their respective rights and obligations under the APA ... is finally settled by the arbitral tribunal, or such other time as may be decided by the tribunal.
2.	The Applicants’ obligations to pay any further instalments due under the APA, the Tranche A Note, the Tranche B Note and the [Omnibus Agreement], and to provide any further standby letter of credit or any standby letter of credit of increased value, be suspended, deferred and/or postponed until such reasonable time after the Respondents pay or cause to be paid all accrued pre-closing taxes together with all interests and penalties in relation thereto on the [B] Plant Land Assets (as defined in the APA) and cause the...