Re Sifan Triyono

• Judge: Kwek Mean Luck JC
• Judgment Date: 11 March 2021
• Docket Number: Originating Summons (Bankruptcy) No 69 of 2020 (Registrar's Appeal No 13 of 2021 and Summons No 600 of 2021)
• Court: High Court (Singapore)

Re Sifan Triyono

[2021] SGHC 55

Kwek Mean Luck JC

Originating Summons (Bankruptcy) No 69 of 2020 (Registrar's Appeal No 13 of 2021 and Summons No 600 of 2021)

General Division of the High Court

Civil Procedure — Appeals — Interlocutory appeals — Appellant seeking leave to adduce evidence before hearing of appeal — Whether conditions in Ladd v Marshall[1954] 1 WLR 1489 had to be satisfied for leave to be granted — Principles governing applications for leave to adduce evidence in interlocutory appeals

Insolvency Law — Bankruptcy — Interim order — Appellant proposing voluntary arrangement — Appellant seeking interim order under s 279(2) Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) — Whether appropriate for court to make interim order — Whether appellant's proposal for voluntary arrangement serious and viable — Principles governing granting of interim order — Section 279(2) Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018)

Held, dismissing the appeal and rejecting the application to adduce fresh evidence:

(1) The conditions to admit fresh evidence on appeal stated in Ladd v Marshall remained a useful analytical tool in considering whether fresh evidence ought to be admitted in an interlocutory appeal. The court was entitled to employ the Ladd v Marshall conditions in exercising its discretion to either admit or reject further evidence. The court should also guard against attempts by a disappointed party seeking to retrieve lost ground in interlocutory appeals: at [11] and [17].

(2) The appellant's application to adduce further evidence was such an attempt to retrieve lost ground. The documents in question could have been adduced earlier with reasonable diligence, when the assistant registrar had given the appellant an opportunity to put in further evidence. In addition, the documents also struggled to meet the second and third conditions of Ladd v Marshall as they neither had an important influence on the result of the case, nor were they apparently credible: at [15] to [21].

(3) The objective of the voluntary arrangement scheme under Pt 14 of the IRDA was to encourage debtors to settle their debts early so as to avoid bankruptcy. An insolvent debtor who intended to make a proposal to its creditors for a voluntary arrangement could apply to the court for an interim order. Whether it was appropriate for the court to make an interim order, as per s 279(2) of the IRDA, depended on whether the proposed voluntary arrangement was serious and viable: at [24], [29] and [32].

(4) In addition, the debtor's plan had to contain sufficient details at the outset in order for the court to assess whether the proposal was serious and viable: at [33].

(5) However, the effect of an interim order was that it staved off all proceedings against the debtor, which was a serious incursion into the rights of creditors to recover against the debtor what was owed. Hence, the court needed to balance the interest of both the debtor and creditors by requiring the proposals to be serious and viable at the outset. The court should filter out proposals that were not serious and viable to avoid unnecessary and wasteful convening of creditors' meeting. Otherwise, an interim order would merely be a means of postponing the making of bankruptcy orders: at [31], [34] and [44].

(6) On the facts, given that KTP was an Indonesian third-party who had no legal obligation to pay the appellant's creditors, there were issues with enforcement which affected the viability of the Proposal. Even if the court took into account the further evidence, the evidence did not address the problem of enforcement: at [41] and [42].

(7) Even applying the “broad assessment” approach used in Re IM Skaugen SE[2019] 3 SLR 979 in the context of a company's moratorium application for a scheme of arrangement, there were serious doubts about KTP's ability to pay, given its poor financial health. Even if further evidence was admitted, the reliability of the future projections of KTP's financials was doubtful in light of KTP's liabilities. Further, the projections were prepared based on assumptions provided by KTP to its auditors, which were not made known to the court: at [47], [49] to [52], and [55].

[Observation: While the granting of a moratorium application in the context of a scheme of arrangement under the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”) entailed different statutory provisions and schema, it was noted that there were considerations similar to those in granting an interim order for a voluntary arrangement. First, there was nothing in the language of s 210(10) of the Companies Act to restrict the court's power to grant the moratorium subject to such terms as the court deemed fit, similar to the language of s 279(2) of the IRDA. Second, the granting of such applications would require the court to balance the competing interests between the debtor and its creditors: at [48].]

Case(s) referred to

Aathar Ah Kong Andrew, Re [2018] SGHC 124 (folld)

Aathar Ah Kong Andrew, Re [2019] 3 SLR 1242 HC, (folld)

Andrla, Dominic, Re [2019] SGHC 77 (folld)

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

Cooper v Fearnley, Re a debtor [1997] BPIR 20 (refd)

Davidson v Stanley [2005] BPIR 279 (refd)

Fletcher v Vooght [2000] BPIR 435 (refd)

Hook v Jewson Ltd [1997] BCC 752 (refd)

IM Skaugen SE, Re [2019] 3 SLR 979 (refd)

JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd [2018] 2 SLR 159 (folld)

Jurong Town Corp v Wishing Star Ltd [2004] 2 SLR(R) 427; [2004] 2 SLR 427 (folld)

Ladd v Marshall [1954] 1 WLR 1489 (refd)

Lim Wee Beng Eddie, Re [2001] SGHC 103 (folld)

Pacific Andes Resources Development Ltd, Re [2018] 5 SLR 125 (refd)

Facts

The appellant, Mr Sifan Triyono, claimed that he would face execution proceedings and bankruptcy proceedings by one Flame SA (“Flame”), in the event that a judgment were to be granted in Flame's favour in a separate suit against the appellant. The appellant filed an application for an interim order under Pt 14 of the Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) (“IRDA”) to allow for consideration of a proposed voluntary arrangement (“the Proposal”). In the Proposal, one Indonesian company, PT Kapuas Tunggal Persada (“KTP”), of which the appellant was allegedly an indirect shareholder, would fund a discounted sum of the total debt (“the Compromised Total Debt”) owed to the unsecured and unrelated creditors.

In the hearing before an assistant registrar, Flame attended and objected to the application for an interim order. The assistant registrar dismissed the application on the basis that there were serious doubts about the viability of the Proposal. There were serious doubts about the legal basis for KTP to make such payments for the appellant, which raised issues of enforcement against KTP. There were also problems with KTP's ability to pay as KTP was in the red. The appellant appealed against the assistant registrar's decision.

On 5 February 2021, the appellant filed an application to adduce further evidence. The evidence included one unsigned affidavit by KTP's president-director confirming that KTP would make available funds to fund the Proposal, attaching financial statements of KTP for the years 2018 and 2019, and projections of KTP's financial statements from 2022–2026 prepared by an auditor. These documents were directed at addressing the concerns raised by the assistant registrar, who had earlier offered the appellant an opportunity to put in this information, and whose offer was rejected by the appellant in the hearing below. The appellant took the position that the Proposal was serious and viable as it stood without adducing further evidence. Flame argued that the application ought to be rejected as the documents did not satisfy the Ladd v Marshall[1954] 1 WLR 1489 (“Ladd v Marshall”) conditions.

The present appeal concerned whether leave should be granted for the appellant to adduce further evidence, and whether an interim order should be made to allow creditors to consider the Proposal. The appellant argued that the assistant registrar failed to consider the Proposal holistically, misunderstood the voluntary arrangement process, and inappropriately scrutinised the Proposal. The appellant contended that a broad assessment should have been applied because a proposal was by definition nascent and incomplete.

Legislation referred to

Companies Act (Cap 50, 2006 Rev Ed) s 210(10)

Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) s 279(2) (consd); ss 276(1), 279, 279(1), Pt 14

Insolvency, Restructuring and Dissolution (Voluntary Arrangements) Regulations 2020 (S 588/2020) r 5(2)(a)

Insolvency Act 1986 (c 45) (UK) ss 255, 255(1), 255(2), 257

Insolvency Rules 1986 (SI 1986 No 1925) (UK) r 5.3

Kyle Gabriel Peters and Feng Zhuo (PDLegal LLC) for the appellant;

Song Swee Lian Corina Mrs Corina Song Jeremiah, Liang Junhong DanielandLim Wan Jen Melissa (Allen & Gledhill LLP) for Flame SA

11 March 2021

Kwek Mean Luck JC:

Introduction

1 This, Registrar's Appeal No 13 of 2021 (“RA 13 of 2021”), is an appeal against the decision of the assistant registrar (“AR”) on 6 January 2021 dismissing the appellant's application in Originating Summons (Bankruptcy) No 69 of 2020 for an interim order under Pt 14 of the Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) (“IRDA”). The issue in this appeal is whether the appellant's draft proposal for a voluntary arrangement (“the Proposal”) satisfies the requirement of being “serious and viable”, such that it would be appropriate for the court to make an interim order under s 279(2) IRDA. At the end of the hearing, I dismissed the appeal and gave my brief reasons. I now set out my reasons in full.

Facts

2 The appellant is an Indonesian businessman and a Singapore Permanent Resident. He claims to be an indirect shareholder holding a majority stake in an Indonesian company, PT Kapuas...