Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte Ltd
Jurisdiction | Singapore |
Judge | Sundaresh Menon CJ |
Judgment Date | 18 October 2023 |
Neutral Citation | [2023] SGCA 32 |
Court | Court of Appeal (Singapore) |
Docket Number | Civil Appeal No 23 of 2022 |
Hearing Date | 03 August 2023 |
Citation | [2023] SGCA 32 |
Year | 2023 |
Plaintiff Counsel | Lee Eng Beng SC and Yeo En Fei Walter (Rajah & Tann Singapore LLP) (instructed), Han Guangyuan Keith and Angela Phoon Yan Ling (Oon & Bazul LLP) |
Defendant Counsel | Balakrishnan Ashok Kumar, Gloria Chan Hui En, Stanley Tan Sing Yee and Shreya Prakash (BlackOak LLC) |
Subject Matter | Insolvency Law,Cross-border insolvency,Recognition of foreign insolvency proceedings,Recognition of foreign solvent liquidation proceedings |
Published date | 18 October 2023 |
This appeal arises from the decision of a High Court judge (the “Judge”) in HC/OS 16/2022 (“OS 16”), which considered whether a voluntary liquidation qualified as a “foreign proceeding” within the meaning of Art 2(
The present appeal raises the important question of whether the SG Model Law encompasses within its ambit foreign insolvency, restructuring or liquidation proceedings concerning solvent companies. This question must be determined having regard to a range of considerations, including: (a) any modifications which Parliament made to the UNCITRAL Model Law when enacting it as the SG Model Law, and Parliament’s intent in making any such modifications; (b) the approaches adopted by courts in other jurisdictions when interpreting the UNCITRAL Model Law or the corresponding provisions in those jurisdictions; and (c) the broader practical implications that would follow if we were to decide that proceedings involving solvent companies do fall within the scope of the SG Model Law.
Facts The parties We begin by recounting the facts. The first appellant is Ascentra Holdings, Inc (in official liquidation) (“Ascentra”). Prior to its liquidation, Ascentra was in the business of selling health and beauty products as well as computer communications software in Hong Kong, Taiwan and Singapore (
The second and third appellants are Ms Chua Suk Lin Ivy (“Ms Chua”) and Mr Graham Robinson (“Mr Robinson”) respectively. They are the joint official liquidators of Ascentra appointed by the Grand Court of the Cayman Islands (the “Cayman Grand Court”) and we refer to them collectively as the “Liquidators” (GD at [6]).
The respondent is SPGK Pte Ltd, a company incorporated in Singapore, and a wholly-owned subsidiary of Shang Peng Gao Ke, Inc (“SPGK Cayman”), a company incorporated in the Cayman Islands. The appellants maintain that Ascentra has potential claims against the respondent, SPGK Cayman as well as another company incorporated in Singapore, Scuderia Bianco Pte Ltd (“Scuderia Bianco”) (GD at [8]). In particular, it is alleged that SPGK Cayman owes certain sums of money to Ascentra, some of which is held by the respondent and Scuderia Bianco.
Background to the dispute Ascentra’s liquidationAscentra’s ultimate beneficial shareholders are seven natural persons. From sometime in 2018, a number of disputes arose between these shareholders over the strategic direction of Ascentra’s business (GD at [10]–[11]). On 1 June 2021, Ascentra’s shareholders resolved to place it in voluntary liquidation and to appoint Mr Robinson as the “voluntary liquidator”. On 2 June 2021, Ascentra filed with the Cayman Islands Registrar of Companies, the documents that were required under the Companies Act (2021 Revision) (Cayman Islands) (the “Cayman Act”) to initiate its voluntary liquidation. Ascentra’s voluntary liquidation is deemed to have commenced on 2 June 2021.
Pursuant to s 124(1) of the Cayman Act and O 15 r 1 of the Cayman Islands Companies Winding Up Rules 2018 (the “Cayman CWR”), Ascentra’s directors were required to file a declaration of solvency no later than 28 days after the voluntary liquidation had commenced (that is, by 30 June 2021), failing which the liquidator was required to apply to the Cayman Grand Court for an order that the voluntary liquidation continue under the supervision of the court. As Ascentra’s directors failed to file the declaration for undisclosed reasons, Mr Robinson duly presented a petition to the Cayman Grand Court on 2 July 2021 for the liquidation to proceed under court supervision (GD at [12]–[13]).
On 17 September 2021, the Cayman Grand Court allowed Mr Robinson’s petition and ordered, among other things, that:
On 23 September 2021, the Liquidators filed a certificate in the Cayman Grand Court as to Ascentra’s solvency in the following terms:
JOINT OFFICIAL LIQUIDATORS’ CERTIFICATE Ascentra Holdings, Inc – In Official Liquidation (the “Company”)
…
TAKE NOTICE that the Joint Official Liquidators hereby certify that they have determined that the above-named Company should be treated as
solvent , for the purposes of section 110(4) of the [Cayman Act] and [Cayman CWR] Orders 8 and 9.AND FURTHER TAKE NOTICE that the Joint Official Liquidators may change their determination from time to time in the light of changes of relevant circumstances and/or their assessment of the Company’s financial position.
[emphasis in original]
On 14 October 2021, in a letter addressed to Ascentra’s shareholders, Mr Robinson similarly stated that the Liquidators had determined that Ascentra was solvent.
The application in OS 16 On 6 January 2022, the appellants filed OS 16 pursuant to Art 15 of the SG Model Law, seeking the following orders (GD at [15]):
The Judge considered that the only issue arising in OS 16 was whether Ascentra’s Cayman Liquidation had its basis in a law relating to insolvency within the meaning of Art 2(
For convenience, we set out Art 2(
For the purposes of this Law —
…- “foreign proceeding” means a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, under a law relating to insolvency or adjustment of debt in which proceeding the property and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation;
The Judge first
The Judge then considered the phrase “under a law relating to insolvency” as a whole and held that the ordinary meaning of that phrase must refer to a body of rules, whether statutory or judge-made, which governs a company that is insolvent. This includes a company which apprehends becoming unable to pay its debts as they fall due in the reasonably near future, and therefore can be said to be in severe financial distress in the present (GD at [64]). The Judge further observed that such an interpretation was consistent with and confirmed by the underlying...
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