Re Genesis Technologies International (S) Pte Ltd

• Jurisdiction: Singapore
• Judge: Roger Hall
• Judgment Date: 06 May 1994
• Neutral Citation: [1994] SGHC 132
• Date: 24 July 1994
• Docket Number: Originating Petition No 23 of 1994
• Year: 1994
• Published date: 19 September 2003
• Plaintiff Counsel: Lauren Ong (Seah Yap Leong & Pnrs)
• Citation: [1994] SGHC 132
• Defendant Counsel: Lam Wai Seng (Peter Chua & Pnrs),Loh Lay Leng (Mirchandani Loh & Ong)
• Court: High Court (Singapore)
• Subject Matter: Factors to be considered before granting petition,Judicial management order,Companies,s 277B Companies Act (Cap 50, 1994 Ed),Receiver and manager,Objective of judicial management

This was the petition of Genesis Technologies International (S) Pte Ltd, formerly known as Genesis Technology Pte Ltd, for an order for judicial management under s 227B of the Companies Act (Cap 50, 1994 Ed).

The company was incorporated on 17 August 1990. The nominal capital of the company was $12,766,000 divided into 12,766,000 shares of $1 each. The amount of the capital paid-up or credited as paid up was $12,766,000.

The first and principal object for which the company was established was as follows:

To carry on all or any of the business of manufacturers, producers, distributors, installers, maintainers, repairers of, general merchants, importers, exporters and dealers in electrical and electronic systems, electronic components, goods, appliances and apparatus of every description; to act as principals or agents and deal in any articles belonging to any such businesses and things used in connection therewith and to carry on the business of providing electrical and electronic know-how and training in the use and service of electrical and electronic systems, electronic components, goods, appliances and apparatus of every description.

In late 1993, the company had received various notices of demand from its creditors. Some creditors had commenced legal proceedings and obtained judgment. Two creditors, namely, Neotechnics Pty and PNE Electric Pte Ltd, who were owed A$18,437.87 and $15,404.25 respectively, had served statutory notices of demand under s 254(2) of the Act. Both notices were dated 13 December 1993. The 21-day period had expired and the company was unable to pay the debts or to secure or compound them to the reasonable satisfaction of the creditors. According to the petition, the company had three secured creditors, that is, Overseas Union Bank, Tat Lee Bank and United Overseas Bank Ltd. Charges had been created over the company`s assets in favour of the banks and the outstanding secured debts amounted to approximately $3.4m. The unsecured debts, according to the company, amounted to $7.8m.

Thus the company was hopelessly insolvent. It had suffered accumulated losses in the region of $16m. The company, however, said that there was a reasonable probability of rehabilitating itself or preserving all or part of its business as a going concern or that otherwise the interests of creditors would be better served by a judicial management order than by resorting to a winding up. The company further said that a judicial management order would be likely to achieve the following:

(i) the survival of the company, or the whole or part of its undertaking as a going concern;

(ii) the approval under s 210 of the Companies Act (Cap 50) of a compromise or arrangement between the company and any such persons as are mentioned in that section; and

(iii) a more advantageous realization of the company`s assets would be effected than on a winding-up.

The law

Judicial management is an alternative to winding up because, as long as a judicial management order is in force, no resolution may be passed or order made for the winding up of a company. Its primary objective is to give the company a new lease of life as a going concern. It is, therefore, a device to save the company from creditors who may wish to destroy the company when it can be rehabilitated for the benefit not only of the shareholders but the unsecured creditors as well. Hence the Act...