Re: Empire Capital Resources Pte Ltd
Jurisdiction | Singapore |
Judge | Aedit Abdullah J |
Judgment Date | 19 February 2018 |
Neutral Citation | [2018] SGHC 36 |
Year | 2018 |
Docket Number | Originating Summons No 392 of 2017 |
Published date | 07 May 2019 |
Court | High Court (Singapore) |
Hearing Date | 06 November 2017,18 January 2018,08 November 2017 |
Plaintiff Counsel | Nair Suresh Sukumaran, Foo Li-Jen Nicole and Tan Tse Hsien, Bryan (Chen Shixian) (Nair & Co LLC) |
Defendant Counsel | Philip Jeyaretnam SC (instructed counsel) (Dentons Rodyk & Davidson LLP), Andrew Chan, Alexander Yeo and Jo Tay (Allen & Gledhill LLP) |
Citation | [2018] SGHC 36 |
By this application, leave is sought under s 210 of the Companies Act (Cap 50, 2006 Rev Ed) (“the Companies Act”) to convene a meeting of creditors to consider a proposed scheme of arrangement (“the proposed scheme”). A number of points of opposition are taken up by the objecting creditors Pathfinder Strategic Credit LP and BC Investment LLC (“the Noteholders”), including that the proposed scheme falls outside the ambit of s 210 as it involves the improper release of claims against third parties; that there has been insufficient disclosure; and that the creditors should be grouped in more than one class for voting. I have concluded that the scheme meeting may be convened, but with two classes of voters.
BackgroundRelated companies to the Applicant previously sought leave to convene meetings of creditors to approve schemes of arrangement. These efforts however came to naught. The present application, the latest attempt, is opposed by creditors who had also previously opposed the earlier applications.
Two note programmes were obtained by the Berau Group. The first was the issuance of US$450,000,000 by Berau Capital Resources Pte Ltd (“BCR”), with 12.5% guaranteed senior secured notes due 8 July 2015 (“the 2015 Notes”). The second was the issuance of US$500,000,000 by PT Berau Coal Energy Tbk (“BCE”), with 7.25% guaranteed senior secured notes due 13 March 2017 (“the 2017 Notes”). Empire Capital Resources Pte Ltd (“the Applicant”) was a guarantor of the 2015 Notes and 2017 Notes (collectively, “the Existing Notes”).1
Previous proceedingsPrior to the 2015 Notes falling due, on 6 July 2015, BCR commenced OS 630/2015 for a moratorium under s 210(10) of the Companies Act (“the First Moratorium”) as BCR was unable to make the required payments. The First Moratorium was granted and allowed negotiations between Pathfinder Strategic Credit LP and other members of a former
On 1 June 2016, OS 550/2016 and OS 551/2016 were filed by BCR and BCE respectively. BCR applied to be placed under judicial management while BCE applied for a moratorium under s 210(10) of the Companies Act.4 On 2 November 2016, OS 550/2016 and OS 551/2016 were withdrawn.5
On 11 November 2016, BCR filed OS 1175/2016 and BCE filed OS 1180/2016 under s 210(1) of the Companies Act. Under these proceedings, BCR and BCE respectively proposed schemes of arrangement to restructure the notes that had been issued by them (“the 2016 proposed schemes”).6
On 9 April 2017, BCR and BCE withdrew OS 1175/2016 and OS 1180/2016 respectively and the Applicant commenced the present proceedings under s 210 of the Companies Act for leave to convene a meeting of creditors to consider the proposed scheme.7
The proposed schemeUnder the proposed scheme, the liabilities of the Applicant and that of related entities including BCE and BCR under the Existing Notes could be discharged. In exchange for the discharge of liabilities, new notes will be issued to the existing noteholders by PT Berau Coal and guaranteed by BCE (“the New Notes”). Noteholders who do not accept the proposal by the stipulated deadline will not be given interests in the New Notes, unless they subsequently so accept before a second stipulated date.8
Unlike the 2016 proposed schemes, there will be no reverse Dutch auction, and the New Notes will not be subordinated. The New Notes will attract interests of LIBOR plus 1% per annum, with a tenor of 10 years.9
It is contemplated that secondary proceedings will be instituted under Chapter 15 in the US if the proposed scheme is approved.10
The Applicant’s caseRelevant considerations at this stage of the proceedingsThe Applicant argues that leave should be granted for a creditors’ meeting to be convened to consider the proposed scheme. It is emphasised that the present application is only the first stage. While composition of the voting classes is a relevant consideration, the court does not consider the merits and fairness of the scheme, as the court is only concerned with the court’s jurisdiction to sanction the scheme if it proceeds:
Several of the Noteholders’ objections relate to matters which are not before the court at this stage: supposed breaches of contractual obligations and court orders by the Berau Group, the unfairness of the proposed scheme and the prejudice to the Noteholders in respect of the action brought in New York.12
Structure of proposed schemeThe Applicant further argues that the inclusion of guarantors in schemes of arrangement, as in the proposed scheme, is not uncommon and cites the case of
Any claim against the third parties would result in claims against the Applicant because of subrogation.14
As for the Noteholders’ argument that there is no genuine give and take in the proposed scheme, this is really an argument that fresh funding is not being provided. This is untrue as new notes would be issued, with a 54.5% return.15 The Noteholders’ argument that there is an expropriation of the rights of the creditors in the proposed scheme is also merely a repetition of its argument that there is no real give and take in the proposed scheme.16
In addition, contrary to the Noteholders’ submission, no security and hence no proprietary rights, are involved here. A distinction is drawn between being secured creditors and beneficiaries under a trust:
The Noteholders’ argument that Indonesian law alternatives to a scheme have not been properly examined is not material at this stage.18
None of the points raised by the Noteholders touch the court’s jurisdiction and are not relevant at this state.
No abuse was committed by the Applicant. Instead, it was the Noteholders who committed abuse.19
ClassificationWith regard to the appropriate classification of creditors, the Applicant argues that a single voting class is sufficient.20
Financial disclosureSufficient financial disclosure has been made. What constitutes material non-disclosure is to be considered in relation to classification, the likelihood of success of the meeting or possible abuse:
As for the argument that it should be made clear whether or not the authors of a position assessment prepared for the Applicant on the fairness of the scheme (“the Position Assessment”) are prepared to accept responsibility for that assessment, there is no requirement for this to be given, and the authors have in any event given a clear assessment. In relation to the purported deficiencies in the Position Assessment highlighted by the Noteholders’ expert, the applicant is happy to put the Noteholders’ experts’ reports before the creditors. Notwithstanding, the Applicant’s position is that mistakes were made by the Noteholders’ expert in various respects.22
MoratoriumA moratorium is required to ensure the Berau Group is protected from hostile litigation until the meeting is held. The Applicant also submitted that the court has an inherent jurisdiction to grant a moratorium that extends to proceedings outside Singapore, citing
To continue reading
Request your trialUnlock full access with a free 7-day trial
Transform your legal research with vLex
-
Complete access to the largest collection of common law case law on one platform
-
Generate AI case summaries that instantly highlight key legal issues
-
Advanced search capabilities with precise filtering and sorting options
-
Comprehensive legal content with documents across 100+ jurisdictions
-
Trusted by 2 million professionals including top global firms
-
Access AI-Powered Research with Vincent AI: Natural language queries with verified citations

Unlock full access with a free 7-day trial
Transform your legal research with vLex
-
Complete access to the largest collection of common law case law on one platform
-
Generate AI case summaries that instantly highlight key legal issues
-
Advanced search capabilities with precise filtering and sorting options
-
Comprehensive legal content with documents across 100+ jurisdictions
-
Trusted by 2 million professionals including top global firms
-
Access AI-Powered Research with Vincent AI: Natural language queries with verified citations

Unlock full access with a free 7-day trial
Transform your legal research with vLex
-
Complete access to the largest collection of common law case law on one platform
-
Generate AI case summaries that instantly highlight key legal issues
-
Advanced search capabilities with precise filtering and sorting options
-
Comprehensive legal content with documents across 100+ jurisdictions
-
Trusted by 2 million professionals including top global firms
-
Access AI-Powered Research with Vincent AI: Natural language queries with verified citations

Unlock full access with a free 7-day trial
Transform your legal research with vLex
-
Complete access to the largest collection of common law case law on one platform
-
Generate AI case summaries that instantly highlight key legal issues
-
Advanced search capabilities with precise filtering and sorting options
-
Comprehensive legal content with documents across 100+ jurisdictions
-
Trusted by 2 million professionals including top global firms
-
Access AI-Powered Research with Vincent AI: Natural language queries with verified citations

Unlock full access with a free 7-day trial
Transform your legal research with vLex
-
Complete access to the largest collection of common law case law on one platform
-
Generate AI case summaries that instantly highlight key legal issues
-
Advanced search capabilities with precise filtering and sorting options
-
Comprehensive legal content with documents across 100+ jurisdictions
-
Trusted by 2 million professionals including top global firms
-
Access AI-Powered Research with Vincent AI: Natural language queries with verified citations

Start Your 7-day Trial
-
Pathfinder Strategic Credit LP v Empire Capital Resources Pte Ltd
...commenced by the Berau Group? Decision below On 19 February 2018, the Judge delivered his decision in Re Empire Capital Resources Pte Ltd [2018] SGHC 36 (“the Judgment”), in which he allowed the creditors’ meeting to be convened for the Proposed Scheme to be considered and voted upon, but h......