Re Lim Wee Beng Eddie

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang JC
• Judgment Date: 23 May 2001
• Neutral Citation: [2001] SGHC 103
• Court: High Court (Singapore)
• Published date: 19 September 2003
• Year: 2001
• Plaintiff Counsel: Robert Yoong (Yoong & Co)
• Defendant Counsel: Ng Hwee Chong (Rodyk & Davidson), holding a watching brief
• Citation: [2001] SGHC 103

JUDGMENT:

Grounds of Decision

1 This appeal concerns the discharge by the Deputy Registrar of the Supreme Court of an interim order made on 2 October 2000 pursuant to an application filed on 18 September 2000 under Section 45 of the Bankruptcy Act for the following orders:

"1. That Ho Wah Onn, an Advocate & Solicitor be hereby appointed as the Nominee pursuant to Section 45 of the Bankruptcy Act ("the Nominee");

2. That the Nominee within 28 days from the date of the Interim Order to be made hereon submit a report pursuant to Section 49 of the Bankruptcy Act to this Honourable Court stating:-

(a) whether in his opinion, a meeting of the debtors creditors should be summoned to consider the debtors proposal and

(b) if in his opinion such a meeting should be summoned, the date on which and the time and place at which, he proposes the meeting should be held.

(c) That the Applicant within 7 days from the date of the Interim Order to be made hereon submit to the nominee a Statement of Affairs in compliance with Section 49(2)(b) of the Bankruptcy Act;

3. That pending the hearing of the Debtors Application hearin, all action/s, execution/s or other legal process against the Applicant or the property of the Applicant be stayed and that no Bankruptcy Petition may be presented or proceeded with against the Applicant or against his property and that no proceedings, execution or other legal process be commenced or continued with against the person or property of the Applicant without the leave of this Honourable Court;

4. Such further or other Order or Orders be made as may be just and equitable in the circumstances and

5. That the costs of and incidentals of this Application be borne by the Applicant."

2 Section 45, which is within Part V of the Bankruptcy Act which relates to Voluntary Arrangements, reads:

"45. (1) Subject to subsection (2), any insolvent debtor who intends to make a proposal to his creditors for a composition in satisfaction of his debts or a scheme of arrangement of his affairs (referred to hereinafter as a voluntary arrangement) may apply to the court for an interim order under this Part.

(2) No partner in an insolvent firm shall apply to the court for an interim order in respect of the firm unless all or a majority of the partners in the firm join or intend to join in the making of the proposal for a voluntary arrangement.

(3) An interim order shall have the effect that, during the period for which it is in force

(a) where the interim order is in respect of an individual debtor

(i) no bankruptcy petition may be presented or proceeded with against the debtor; and

(ii) no other proceedings, execution or other legal process may be commenced or continued against the person or property of the debtor without the leave of the court; and

(b) where the interim order is in respect of a firm

(i) no bankruptcy petition may be presented or proceeded with against the firm or, except with the leave of the court, any partner therein; and

(ii) no other proceedings, execution or other legal process may be commenced or continued against the firm or its property or against the person or property of any partner in the firm, without the leave of the court.

(4) An interim order shall cease to have effect 42 days after the making thereof unless the court otherwise directs."

THE APPLICANTS AFFIDAVIT FILED ON 18 SEPTEMBER 2000

3 In the Applicants affidavit filed on 18 September 2000, he listed five reasons for this application:

(1) the primary reason was to get some form of final settlement to his financial problems which were taking a toll on his mind, his health and his career;

(2) while he was presently unable to repay all his creditors in full, he believed that he would be able to repay a substantial amount with an initial lump sum payment of $4.4 million within six months of his proposal being accepted;

(3) if the creditors commenced legal proceedings against him, the costs (which would mostly be on an indemnity basis) would add to his financial misery without helping the creditors in any way;

(4) the general scheme of his proposal was to pay an initial lump sum payment of $4.4 million within the first six months and to repay at least 50% of his debts over 27 months, with a high probability of full repayment; and

(5) rendering him a bankrupt would not help the creditors in recovering the money owed to them.

4 Various legal proceedings have been commenced against him and one creditor (Coutts Bank) presented a Bankruptcy Petition against him in February 2000 and which was to be heard on 22 September 2000.

5 The Applicant wished to have Mr Ho Wah Onn, a practising Advocate & Solicitor, to be his nominee and trustee for the purposes of this application and to carry into effect the scheme proposed. Mr Ho has been the solicitor for the Applicant and his companies on previous occasions. On 12 September 2000, the Applicant gave written notice of his proposal to Mr Ho which contained a summary of the scheme of voluntary arrangements.

6 The Applicant then set out his personal history. He is 43 years of age, married and has a daughter aged eight and a son aged six. He is a director of Mapor Island Resort Pte Ltd which was set up to market and to manage a resort development project in Bintan, Indonesia.

7 He completed his A level examinations in Singapore in 1978 as a private student while serving National Service. He then worked as flight steward until October 1980 when he became a property agent. He was very successful as a property agent until the 1983 recession. He then decided to enrol as a student in the Faculty of Arts and Social Sciences, National University of Singapore.

8 To support himself through university, the Applicant continued to deal in property and bought into a hairdressing business. He also traded in seafood on a fairly large scale. All this were too much a strain on him and he had to apply for a years leave from his studies.

9 By 1988, his mainstay business was trading in properties. He also ventured with MBf Holdings Bhd into the food business and set up a company. He has since sold all his shares in that company to the other shareholders.

10 In July 1990, he married and then incorporated his family investment company, Elle Holdings Pte Ltd. Elle performed very well from 1990 to 1995 and even made an extraordinary gain of some $9 million in 1995 from the sale of its investment properties.

11 In 1994, the Applicant ventured into the forestry business and incorporated SINO P.N.G. Resources Pte Ltd. He still owns about 35% of the equity of SINO which has a paid up capital of nearly $6 million.

12 Elle has a convertible loan of about $2.5 million due from SINO which, when converted into equity, would cause Elle and the Applicant to own a combined and controlling stake of 57% of SINO.

13 In August 1996, the forest assets of SINO (three large concessions in the Republic of Congo) were valued at US$52 million. In his proposed scheme of voluntary arrangements, it was stated that these concessions were held through SINOs fully owned subsidiary which owned 80% of them. In 1995, Idris Hydraulics Bhd, a public company listed on the main board of the Kuala Lumpur Stock Exchange, made an offer to purchase 50% of the equity of SINO for US$40 million. That offer was rejected by the shareholders as the company was then valued at US$120 million by Rothschild Ventures Asia. In the said proposed scheme of voluntary arrangements, the Applicant stated that the Asian financial crisis had caused SINO to suspend its operations since mid-1997.

14 In 1995, Elle re-entered the property market and purchased 26/A/B/C/D Ewart Park, Singapore for about $11 million. After spending another $600,000 on renovations, these properties generated about $300,000 of annual rental income between 1996 to the middle of 1998.

15 In March 1996, Elle purchased 733 Mountbatten Road, Singapore. The property was refinanced in July 1997 by Coutts Bank (Schweiz) AG, with a total drawdown of $7.75 million. Elle also borrowed US$9 million from the Industrial and Commercial Bank of China ("ICBC") to finance the forestry business and to renovate the Ewart Park properties.

16 The Applicants liabilities arose as a result of his personal guarantees given to various banks for loans granted to Elle. Except for Coutts Bank, none of the other banks had issued any demand for repayment and the Applicant was working cordially with them to resolve his financial matters. The loan from Coutts Bank was used to repay the previous mortgagee bank $5.8 million, to repay ICBC $200,000, to repay a loan of $1 million to Galleries Development Pte Ltd, to extend a friendly loan of $500,000 to the Grandlink Group Pte Ltd and to set aside $200,000 to service the loan. The outstanding debt due to Coutts Bank is $1.45 million.

17 Elle has sued Grandlink for $450,000 and obtained judgment against Grandlink and its guarantor, Ricky Goh. Ricky Gohs bankruptcy, execution of that judgment was delayed until late June 2000 when the bankruptcy order against Ricky Goh was rescinded.

18 On 18 August 2000, Elle was ordered to be wound up on the petition of Coutts Bank. Elle was appealing against that order and would proceed to reinstate its claim against Coutts Bank for fraud and would seek substantial damages arising from the banks action.

19 The proposed scheme of voluntary arrangement was necessitated by Coutts Banks relentless pursuit to bankrupt the Applicant and put an end to any further claims against the bank. Coutts Bank was still holding a parcel of land of about 330,000 square feet in the prime Tanjung Langsat Industrial Estate in Johor worth RM 2 million as security. When subdivision of that piece of land was approved, its value could be easily enhanced to at least RM 8 million. As Coutts Bank could afford to sit and wait for the value of the land to rise over time, it had little to lose in making the Applicant...