Re Pacific Andes Resources Development Ltd and other matters

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeKannan Ramesh JC
Judgment Date27 September 2016
Date27 September 2016
Docket NumberOriginating Summonses Nos 668 and 812–814 of 2016

[2016] SGHC 210

High Court

Kannan Ramesh JC

Originating Summonses Nos 668 and 812–814 of 2016

Re Pacific Andes Resources Development Ltd and other matters

Cavinder Bull SC, Blossom Hing, Mohan Gopalan, Teri Cheng and ChanWei Meng (Drew & NapierLLC) for the applicant;

Thio Shen Yi SC, Alexander Pang, Evan NgandPamela Chan (TSMP Law Corporation) for Bank of America NA;

Chelva Rajah SC, Zara ChanandMegan Chia (Tan Rajah & Cheah) forSahara Investment Group Pte Ltd;

Andre Maniam SC, Tan Mei Yen, Yu Kanghao, Vithiya RajendraandAvinash Selvarajah(WongPartnership LLP) for Cooperatieve Rabobank UA, Standard Chartered Bank (Hong Kong) Limited and DBS Bank Ltd;

Lee Eng Beng SC, Mark Cheng, Matthew TeoandZhao Jiawei (Rajah & TannSingapore LLP) for Malayan Banking Berhad;

Suresh Nair and Nicole Foo (Advocatus Law LLP) for Informal Steering Committee;

Nish Shetty and Keith Han (Cavenagh Law LLP) for Steering Committee of Bondholders;

Kwek Fei Joseph, Bondholder, in person; andWang Chan Tak, Bondholder, in person.

Case(s) referred to

Antony Gibbs & Sons v La Société Industrielle et Commerciale des Métaux (1890) LR 25 QBD 399 (not folld)

AWB Geneva SA v North America Steamships Ltd [2007] EWHC 1167 (Comm) (folld)

Beluga Chartering GmbH v Beluga Projects (Singapore) Pte Ltd [2014] 2 SLR 815 (folld)

Bloom v Harms Offshore AHT “Taurus” GmbH & Co KG [2010] Ch 187; [2010] 2 WLR 349 (folld)

Bulong Nickel Pty Ltd [2002] WASC 226 (refd)

Cambridge Gas Transport Corp v The Official Committee of Unsecured Creditors of Navigator Holdings plc [2007] 1 AC 508 (refd)

Codere Finance (UK) Ltd, Re [2015] EWHC 3778 (Ch) (folld)

Conchubar Aromatics Ltd, Re [2015] SGHC 322 (folld)

Contel Corp Ltd, Re [2011] SC (Bda) 14 Com (refd)

Drax Holdings Ltd, Re [2004] 1 WLR 1049 (refd)

GAE Pty Ltd, Re [1962] VR 252 (not folld)

Global Distressed Alpha Fund I Limited Partnership v PT Bakrie Investindo [2011] 1 WLR 2038 (refd)

Griffin Securities Corp, Re [1999] 1 SLR(R) 219; [1999] 3 SLR 346 (refd)

Hong Kong Institute of Education v Aoki Corp [2004] 2 HKLRD 760 (refd)

Indah Kiat International Finance Co BV, Re [2016] EWHC 246 (refd)

Kuala Lumpur Industries Bhd, Re [1990] 2 MLJ 180 (folld)

LDK Solar Co Ltd, Re [2014] HKCU 2855 (refd)

MacKinnon v Donaldson, Lufkin and Jenrette Securities Corp [1986] 1 Ch 482 (folld)

Magyar Telecom BV, Re [2015] 1 BCLC 418 (Ch) (distd)

Metinvest BV, Re [2016] EWHC 79 (Ch) (refd)

Ng Huat Foundations Pte Ltd, Re [2005] SGHC 112 (refd)

Opti-Medix Ltd, Re [2016] 4 SLR 312 (refd)

Oriental Inland Steam Co, Re; ex p Scinde Railway Co (1874) LR 9 Ch App 557 (refd)

Projector SA, Re [2009] 2 SLR(R) 151; [2009] 2 SLR 151 (refd)

Punj Lloyd Pte Ltd, Re [2015] SGHC 321 (refd)

Rodenstock GmbH, Re [2011] EWHC 1104 (Ch) (refd)

Royal Bank of Scotland NV, The v TT International Ltd [2012] 2 SLR 213 (refd)

Sea Assets Ltd v Perusahaan Perseroan (Persero) PT Perusahaan Penerbangan Garuda Indonesia [2001] EWCA Civ 1696 (refd)

Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871 (folld)

Stichting Shell Pensioenfonds v Krys [2015] AC 616 (folld)

TPC Korea Co Ltd, Re [2010] 2 SLR 617 (refd)

Union Accident Insurance Co Ltd, Re [1972] 1 WLR 640 (folld)

Legislation referred to

Companies Act (Cap 50, 2006 Rev Ed) ss 4, 210, 210(1), 210(10) (consd);ss 210(11), 350, 351

Companies — Foreign companies — Schemes of arrangement — Foreign company seeking moratorium — Foreign company with business activities in Singapore — Foreign companies subsidiary to foreign parent company with business activities in Singapore — Foreign companies with creditors within Singapore — Debt not subject to Singapore law — Whether foreign company had locus standi to apply for moratorium — Whether sufficient nexus to Singapore went to jurisdiction or discretion of court to grant moratorium — Whether parent company with nexus to Singapore constituted sufficient nexus — Whether creditors within jurisdiction constituted sufficient nexus — Whether debt not subject to Singapore law was bar to jurisdiction — Section 210 Companies Act (Cap 50, 2006 Rev Ed)

Companies — Schemes of arrangement — Company seeking moratorium over proceedings outside Singapore — Whether court had jurisdiction to grant moratorium restraining proceedings outside Singapore — Whether court had jurisdiction to grant moratorium restraining proceedings outside Singapore under s 210(10) Companies Act (Cap 50, 2006 Rev Ed) — Whether court had inherent jurisdiction to grant moratorium proceedings outside Singapore — Section 210 Companies Act (Cap 50, 2006 Rev Ed)

Companies — Schemes of arrangement — Creditors constituting in value and/or number at least equal to statutory threshold for successful scheme indicating resistance to any scheme — Whether court should grant moratorium where creditors constituting in value and/or number at least equal to statutory threshold for successful scheme had indicated resistance to any scheme — Section 210 Companies Act (Cap 50, 2006 Rev Ed)

Insolvency Law — Cross-border insolvency — Schemes of arrangement — Company providing scheme plan with little particularity — Scheme plan dependant on foreign restructuring proceedings — Main asset of company subject to foreign restructuring proceedings — Whether scheme plan had sufficient particularity — Whether lack of particularity indicated lack of bona fides — Section 210 Companies Act (Cap 50, 2006 Rev Ed)

Facts

Pacific Andes Resources Development Ltd (“PARD”), Parkmond Group Limited (“PGL”), Pacific Andes Enterprises (BVI) Limited (“PAE”) and Pacific Andes Food (Hong Kong) Limited (“PAF”) (collectively “the Applicants”) were part of a cluster of companies described as the Pacific Andes Group (“the Group”). The most substantial asset of the Group was its business in the production of fishmeal and fish oil (“the Peruvian Business”), the economic activity of which took place in Peru through operating units in which PARD held an indirect interest. The Group also had a business in the supply of frozen fish and related products (“the Frozen Fish Business”).

The companies in the Group were incorporated in various jurisdictions. None of the Applicants were incorporated in Singapore, though PARD was listed on the Singapore Exchange and carried out business activity in Singapore. PGL, PAE and PAF (collectively, “the Subsidiaries”) did not have any business activity or assets in Singapore.

The Subsidiaries owed liabilities to various creditors which were guaranteed by PARD as the Subsidiaries' parent. None of these debts, both primary and contingent, were subject to Singapore law; they were instead subject to Hong Kong law. Separately, PARD had undertaken fund raising in Singapore, having issued Singapore denominated bonds governed by English law (“the SGD Bonds”) which were traded on the Singapore Exchange.

In an attempt to formulate a rescue plan, insolvency proceedings were commenced almost simultaneously in various jurisdictions. The Peruvian units making up the Peruvian Business commenced restructuring proceedings in Peru (“the Peruvian Proceedings”) simultaneously with Chapter 11 proceedings being commenced in the United States Bankruptcy Court, Southern District of New York (“the US Proceedings”) by the entity controlling the Peruvian units. No restructuring plan had been proposed in the Peruvian Proceedings and the US Proceedings.

In turn, the Applicants each filed applications under s 210(10) of the Companies Act (Cap 50, 2006 Rev Ed) (“the Act”) for moratoria against proceedings brought or to be brought against them by their creditors in Singapore and elsewhere (“the Applications”). The Applications were allowed and orders were made as to PARD (“the PARD Orders”) and the Subsidiaries (“the Obligor Orders”). The moratorium in each instance was granted until 5 September 2016.

The Applicants each filed applications to extend the moratoria. Certain of their creditors filed applications to set aside the PARD Orders and the Obligor Orders, save that no application was made as regards PAF. The creditors opposing the PARD Orders and the Obligor Orders collectively held more than 25% of the debt of each of the Applicants. On the other hand, the creditors supportive of the Applications made up a substantial portion of the debts owed by the Applicants, though this was insufficient to cross the statutory threshold value for a successful scheme vote under s 210 of the Act.

In the Applications, a broad outline of the restructuring plan was placed before the court (“the Plan”). The Plan was short on details as it depended largely on the restructuring of the Peruvian Business, which in turn depended on the outcome of the US Proceedings and the Peruvian Proceedings to a large extent.

Held, granting the applications in part:

(1) Section 210(10) of the Act did not confer on the court extra-territorial jurisdiction. To construe otherwise would be to create dissonance between the moratorium provisions on liquidation and judicial management: at [16] and [17].

(2) The court had subject matter jurisdiction under s 210 of the Act so long as the applicant was a “company” within the definition provided in s 210(11) of the Act. In exercising subject matter jurisdiction over the scheme, creditors who were within the jurisdiction or participating in the scheme and whose debts were legitimately subject to the scheme would be subject to the in personam jurisdiction of the court for the purpose of the application under s 210. The court, having subject matter jurisdiction over the scheme and in personam jurisdiction over these creditors, was then able to exercise its powers to restrain such creditors only within the limits of s 210(10) of the Act: at [19].

(3) The court did not have the inherent jurisdiction to restrain creditors over whom it had in personam jurisdiction from unsettling efforts to restructure under s 210 of the Act by commencing proceedings elsewhere. The jurisdiction was recognised in...

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