Interocean Holdings Group (BVI) Ltd v Zi-Techasia (Singapore) Pte Ltd (in liquidation)
|Edmund Leow JC
|13 January 2014
| SGHC 9
|High Court (Singapore)
|30 December 2013,15 November 2013
|Originating Summons No 981 of 2013
|Gerald Yee and Jasmin Yek (Colin Ng & Partners LLP)
|17 January 2014
This was an application made by the plaintiff for an order under s 279(1) of the Companies Act (Cap 50, 2006 Rev Ed) (“the Act”) that the members’ voluntary liquidation of the defendant company be stayed altogether and that the officers of the defendant be permitted to resume management of the company. The plaintiff first appeared before me on 15 November 2013; the defendant was not represented but I was shown a letter dated 21 October 2013 wherein the liquidator said for the defendant that it had no objection to this application.1
After hearing oral submissions I was satisfied that I had the power under s 279(1) of the Act to grant the stay but I adjourned the matter to consider first, whether I should grant a stay; and second, whether it would have the effect which the plaintiff said it did and therefore whether I ought to grant the second prayer.
On the first point, I directed the plaintiff to provide satisfactory answers on why it required the resurrection of the defendant when it would be easier and cheaper simply to incorporate a new company. When the matter was heard again on 30 December 2013, I was informed that there were financial and tax incentives in reinstating the defendant company; the defendant company was part of a larger group of companies, the Zuellig Industrial Group, and such incentives would have to be captured before the close of the Zuellig Industrial Group’s financial year. I was satisfied with this reason.
In the meantime I had also considered the issue of whether the plaintiff’s second prayer had the effect in law claimed by the plaintiff and after reviewing the authorities I came to the conclusion that it did.
As both my concerns were allayed, at the hearing on 30 December 2013 I granted the plaintiff’s order in terms. But as the matter appeared to deal with an issue of law on which there is no Singapore authority, I thought it appropriate to issue grounds for my decision.
The background facts were these. The plaintiff was a holding company beneficially entitled to all the issued shares of the defendant. The defendant was a Singapore company incorporated on 2 September 2004. On 12 April 2013, the members of the defendant resolved at an extraordinary general meeting to put the company into voluntary winding up on the basis that it had no business transaction for over 12 months. Liquidators from Baker Tilly TFW LLP were appointed.
Subsequently, the plaintiff changed its mind. It now wanted the business of the defendant to continue so that the defendant could “be profitable from new potential business”.2 I was told that there was also considerable goodwill in the defendant’s corporate name and that there were, as I have said, financial and tax incentives for reinstating the defendant. On 4 September 2013, an extraordinary general meeting of the company was held wherein it was resolved by way of special resolution that the company would withdraw its winding up petition and then do one of three things: void the dissolution, stay the winding up proceedings altogether, or revoke them entirely. On 30 September 2013, the liquidators wrote3 to say they had no objections to the cessation or stay of the members’ voluntary winding up. The liquidators said that as at 11 April 2013, the defendant had cash at the bank in the sum of $94,715.99 and no liabilities and that, as at 30 September 2013, it had $92,881.63 to its credit at the bank representing the sum of the defendant’s surplus assets. There were prior liabilities which by that date had been discharged. The defendant owed the plaintiff $709,095 of which $699,998 was capitalised to equity and the remaining sum of $9,097 was paid in full. It owed $133,176 to Argus Industrial Group Holdings Ltd (“AIGHL”) which were also paid in full. Accrued expenses of $5,293 up to 31 January 2013 were also paid in full. Thus, as at 30 September 2013, the liquidators were able to say that there were no outstanding liabilities; that they had been paid their fees out of the defendant’s assets prior to liquidation; and that they were not aware of any misfeasance proceedings against the officers of the defendant or of any other way in which the conduct of the defendant was against commercial morality or the public interest.
I turn now to the law. Section 279(1) of the Act reads as follows:
279.—(1) At any time after an order for winding up has been made, the Court may, on the application of the liquidator or of any creditor or contributory and on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings either altogether or for a limited time on such terms and conditions as the Court thinks fit.
This is a provision dealing with general powers of a court on winding up; and notwithstanding the words on its face it would also apply in a voluntary winding up due to the effect of s 310 of the Act which reads:
310.—(1) The liquidator or any contributory or creditor may apply to the Court —( a) to determine any question arising in the winding up of a company; or( b) to exercise all or any of the powers which the Court might exercise if the company were being wound up by the Court.
I was therefore satisfied that I had the power to order a stay of winding up proceedings altogether and further that the exercise of this power was entirely discretionary.
As to the exercise of discretion, the plaintiff cited the cases of
That brings me to the third point, that of the persons whose interests have to be considered on an application for a stay. These must, of course, depend on the circumstances of each case; but where, as here, there is a strong probability, if not more, that the assets of the company will suffice to pay all the creditors and the expenses of the liquidation, and so leave a surplus for the members of the company, there are plainly three categories to consider. First, there are the creditors. Their rights are finite, in that they cannot claim more than 100p in the pound. I cannot see that in normal circumstances any objection to a stay could be made on behalf of the creditors if for each of them it is established either that he has been paid in full, or that satisfactory provision for him to be paid in full has been or will be made, or else that he consents to the stay or is otherwise bound not to object to it. Second, there is the liquidator. By section 309 [of the Companies Act 1948], all costs, charges and expenses properly incurred in the winding up, including the liquidator’s remuneration, are made payable out of the assets of the company in priority to all other claims. Where a liquidator has accepted office on this footing, I cannot see that in normal...
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Interocean Holdings Group (BVI) Ltd v Zi-Techasia (Singapore) Pte Ltd
...Holdings Group (BVI) Ltd Plaintiff and Zi-Techasia (Singapore) Pte Ltd (in liquidation) Defendant  SGHC 9 Edmund Leow JC Originating Summons No 981 of 2013 High Court Companies—Winding up—Company in members' voluntary winding up—Special resolution to stay winding-up proceedings—Whethe......