Re Projector SA

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeTan Lee Meng J
Judgment Date12 December 2008
Neutral Citation[2008] SGHC 234
Citation[2008] SGHC 234
Defendant CounselLee Kiat Seng and Shum Wai Keong (Wong & Leow LLC),Prem Gurbani and Bernard Yee (Gurbani & Co),Sarjit Singh SC, David Chan and Ivan Koh (Shook Lin & Bok LLP),Andre Maniam, Jenny Tsin and Wendy Lin (WongPartnership LLP),Cavinder Bull SC and Lim Ming Yi (Drew & Napier LLC)
Date12 December 2008
Plaintiff CounselVinodh Coomaraswamy SC, Pradeep Pillai, Stephanie Wee and Victoria Ho (Shook Lin & Bok LLP)
Publication Date09 January 2009
Docket NumberCompanies Winding Up No 103 of 2008
SubjectWhether creditor's application was abuse of process,Section 377(2)(b) Companies Act (Cap 50, 2006 Rev Ed),Section 253(1) Companies Act (Cap 50, 2006 Rev Ed),Factors determining whether court had jurisdiction to make winding-up order in respect of foreign company,Whether creditor who presented winding-up application against foreign company in Singapore had to be Singapore creditor,Whether only local creditors and liquidator appointed in foreign liquidation proceedings entitled to apply for foreign company to be wound up in Singapore,Powers of foreign liquidator compared with those of Singapore liquidator,Section 377(3)(c) Companies Act (Cap 50, 2006 Rev Ed),Winding up,Whether applicant had to prove that there would be surplus of funds after local creditors had been paid,Companies

12 December 2008

Judgment reserved

Tan Lee Meng J:

1 This case involves an application by a foreign company, ING Belgium NV (“ING”), to wind up Projector SA, a company incorporated in Belize and presently being liquidated in that country. Until recently, Projector SA was registered as a foreign company in Singapore. ING, which had served a statutory demand on Projector SA, made this application to wind up Projector SA with the agreement of the provisional liquidators appointed in Belize. Two of Projector SA’s other creditors, namely SK Energy Europe Ltd and Bayerische Hypo-und Vereinsbank AG, support the application to wind up Projector SA. However, the application was vehemently opposed by other creditors of Projector SA, namely two companies in the Mitsui group, Mitsui & Co Ltd and Mitsui Oil (Asia) Hong Kong Ltd (both referred to as “Mitsui”) and Samsung Total Petrochemical Co Ltd (“Samsung”).

Background

2 ING and Projector SA had a trade finance relationship, pursuant to which they entered into four transactions concerning the purchase of naphtha and gas oil loaded onto and shipped in three vessels, one of which was the Morning Express (“the vessel”).

3 ING Belgique SA and ING Belgium, Brussels, Geneva Branch, who claimed to be the holders of three bills of ladings in relation to the goods on board the vessel, claimed that they had not been paid under the relevant Letter of Credit issued on behalf of Projector SA’s subsidiary, Projector Asia Pte Ltd (“Projector Asia”). As they did not take adequate banking collaterals from Projector SA, they arrested the vessel in Singapore on 30 May 2008.

4 At the material time, Mitsui were the charterers of the vessel. Pursuant to a Letter of Indemnity (“LOI”) dated 15 May 2008 furnished by Projector SA in favour of Mitsui with respect to the said vessel, Projector SA was obliged to provide on demand such bail or other security as may be required to prevent the arrest or detention or to secure the release of the ship. Mitsui insisted that Projector SA fulfil its obligations under the LOI and secure the release of the vessel. As Projector SA did not respond positively, Mitsui commenced Suit No 397 of 2008 and served the Writ of Summons on Projector SA on 10 June 2008. On the same day, Mitsui applied for an interim mandatory injunction against Projector SA with respect to the latter’s breach of the LOI.

5 At the hearing of Mitsui’s application by Choo Han Teck J, Projector SA informed the Court through a letter dated 10 June 2008 that it was “in serious financial difficulty” and that it was in no position to furnish the security requested by Mitsui. The hearing was adjourned to allow Projector SA to file an affidavit in response to Mitsui’s application for the interim injunction.

6 In the meantime, damages mounted while the vessel was still under arrest. On 16 June 2008, Mitsui procured a bank guarantee from the Singapore branch of the Mizuho Corporate Bank Ltd for the sum of US$69 million to secure the release of the vessel.

7 On 13 August 2008, Projector SA informed the Court that it had on 6 August 2008 “resolved to voluntarily wind up itself” and to appoint a liquidator.

8 On 14 August 2008, ING filed two applications in the Supreme Court of Belize to wind up Projector SA and for Mr Andrew Lawrence Hosking (“Mr Hosking”) and Mr Mark Richard Byers (“Mr Byers”), who are licensed insolvency practitioners of Grant Thornton UK LLP, to be appointed as provisional liquidators of Projector SA. The second application was to wind up FR8 Limited, a wholly-owned subsidiary of Projector SA.

9 Pursuant to ING’s application to wind up Projector SA, on 18 August 2008, the Belize Court appointed Mr Hosking and Mr Byers as Projector SA ‘s provisional liquidators. On 10 October 2008, the Supreme Court of Belize ordered the winding up of Projector SA and appointed Mr Hosking and Mr Byers as the liquidators of Projector SA.

10 Prior to the making of the order in Belize for the winding up of Projector SA, Mitsui had obtained judgment in default of defence in the Singapore High Court on 8 September 2008 for, inter alia, the sum of US$69 million. On 10 September 2008, Mitsui applied for a Writ of Seizure and Sale against shares which it claimed were owned by Projector SA in a Singapore company, FR8 Holdings Pte Ltd (“FR8 Holdings”). That very afternoon, ING applied for a stay of proceedings in Mitsui’s Suit No 397 of 2008 against Projector SA. On the previous evening, ING had filed its application to wind up Projector SA. Choo Han Teck J initially dismissed the application but after hearing further arguments, he ordered a stay of proceedings.

11 As for Samsung, it had made a claim in Suit No 383 of 2008 (“the Samsung suit”) against Projector Asia as well as Projector SA. The claim relates to alleged breaches of agreements concerning the sale and purchase of naphtha and for diverting the proceeds of sale in breach of trust. Samsung complained that Projector SA induced Projector Asia to breach the said agreements, unlawfully interfered with Samsung’s business and knowingly assisted Projector Asia’s breaches of trust. On 10 October 2008, Samsung obtained summary judgment against Projector SA for around US$9.4 million, together with interest from 4 June 2008 until the date of payment.

12 Samsung objected to Projector SA being wound up in Singapore on the ground that it has no assets in Singapore and that the Court has no jurisdiction to order the winding up of this company in Singapore.

13 As for Mitsui, it opposed the winding up application on the following more elaborate grounds:

(a) ING has no standing to make the application;

(b) ING’s action is an abuse of process as it was brought up for collateral purposes, including preventing Mitsui from duly executing its judgment against Projector SA;

(c) The appointment of a Singapore liquidator is unnecessary and of no legitimate benefit to any relevant party; and

(d) ING has not shown a sufficient nexus between Projector SA and Singapore so as to justify a Singapore winding up order.

Whether Projector SA should be wound up

14 When considering ING’s application for an order to wind up Projector SA, two issues must be considered. First, does the Court have jurisdiction? Secondly, if it does, should the Court exercise its discretion to order the winding up of Projector SA?

15 ING’s application to wind up Projector SA is made under s 253(1)(b) of the Companies Act (Cap 50, 2006 Rev Ed), which provides that a company may be wound up under an order of the Court on the application of, inter alia, “any creditor, including a contingent or prospective creditor, of the company”.

ING’s rights as a foreign creditor

16 Mitsui asserted that the Court has no jurisdiction to deal with the application of ING, a foreign creditor, because the only creditors who may wind up a foreign company in Singapore are Singapore creditors. It referred to s 377(3) of the Companies Act, which provides that:

A liquidator of a foreign company appointed for Singapore by the Court or a person exercising the powers and functions of such a liquidator –

(c) shall, unless otherwise ordered by the Court, only recover and realise the assets of the foreign company in Singapore and shall, subject to paragraph (b) and subsection (7), pay the net amount so recovered and realised to the liquidator of that foreign company for the place where it was formed or incorporated after paying any debts and satisfying any liabilities incurred in Singapore by the foreign company.

[emphasis added]

17 The effect of s 377(3)(c) of the Act was considered by the Court of Appeal in Tohru Motobayashi v Official Receiver & Anor [2000] 4 SLR 529. LP Thean JA, who delivered the judgment of the Court, said at [44]:

[O]n the true construction of s 377(3)(c) of the Companies Act, the liquidator of a foreign company appointed for Singapore by the court is required under that section to pay the net amount of all moneys recovered and realised in Singapore to the liquidator in the country where the foreign company was formed, only after paying (i) all the preferential debts as defined in s 328 of the Companies Act, and thereafter (ii) all the debts and liabilities incurred in Singapore by the foreign company.

[emphasis added]

18 Mitsui argued that the only two parties who have an interest in a...

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