Baring Futures v Deloitte & Touche: Scheme of Arrangement & Auditors' Indemnity Costs
The High Court of Singapore, presided over by Justice Lai Kew Chai, addressed the application by the liquidators of Baring Futures (Singapore) Pte Ltd (in compulsory liquidation) ("BFS Liquidators") to sanction a scheme of arrangement under Section 210 of the Companies Act. The court also considered motions by Deloitte & Touche Singapore ("D&T Singapore") seeking reversal of the BFS Liquidators' rejection of their proofs of debt related to indemnity costs. The court deferred determination of D&T Singapore's indemnity and super-priority claims until certain conditions are met, and sanctioned the Singapore Scheme.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Singapore Scheme sanctioned; determination of indemnity and super-priority claims of Deloitte & Touche Singapore deferred.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court considered a scheme of arrangement and D&T Singapore's indemnity costs claims, deferring determination until certain conditions are met. The court sanctioned the Singapore Scheme.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Baring Futures (Singapore) Pte Ltd (in compulsory liquidation) | Respondent | Corporation | Singapore Scheme sanctioned | Consent | |
| Deloitte & Touche Singapore | Applicant | Partnership | Determination of indemnity and super-priority claims deferred | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Lai Kew Chai | Judge | Yes |
4. Counsels
4. Facts
- BFS Liquidators sought to convene a creditors’ meeting to agree to a scheme of arrangement.
- D&T Singapore lodged proofs of debt for indemnity costs and contribution claims.
- D&T Singapore claimed S$42,459,135.57 in indemnity costs.
- The Singapore Scheme was approved by a majority of creditors.
- D&T Singapore claimed a contractual indemnity under Article 110 of BFS's Articles of Association.
- BFS Liquidators disputed D&T Singapore's entitlement to indemnity under Article 110.
- BFS Liquidators sued Coopers & Lybrand, Singapore for damages for negligence, which was settled.
5. Formal Citations
- Re Baring Futures (Singapore) Pte Ltd (in compulsory liquidation) and another action, CWU 246/1995, NM 600141/2001, 600142/2001: OS 601723/2001, SIC 602847/2001, [2002] SGHC 15
6. Timeline
| Date | Event |
|---|---|
| Deloitte & Touche Singapore appointed as auditors of Baring Futures (Singapore) Pte Ltd | |
| Deloitte & Touche Singapore ceased to be auditors of Baring Futures (Singapore) Pte Ltd | |
| Winding up petition filed (CWU 246/1995) | |
| Leave granted to BFS Liquidators to convene a creditors’ meeting | |
| Creditors’ meeting convened | |
| Deloitte & Touche Singapore filed the second Proof of Debt | |
| Hearing on sanction of Singapore Scheme | |
| Judgment issued |
7. Legal Issues
- Approval of Scheme of Arrangement
- Outcome: The court sanctioned the Singapore Scheme as approved by the requisite majority in value of the creditors.
- Category: Substantive
- Indemnity Costs Claims of Auditors
- Outcome: The court deferred determination of the indemnity and super-priority or, alternatively, the expense claims of Deloitte & Touche Singapore until three events have come to past.
- Category: Substantive
8. Remedies Sought
- Reversal of Liquidators' Rejection of Proofs of Debt
- Admission of Proofs of Debt in Full
- Indemnity for Costs
9. Cause of Actions
- Breach of Contract
- Negligence
10. Practice Areas
- Insolvency
- Commercial Litigation
11. Industries
- Accounting
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| In re Pacific Coast Syndicate, Ltd | Chancery Division | Yes | [1913] 2 Ch 26 | England and Wales | Cited for the principle of the estate costs rule. |
| Norglen v Reeds Raines Prudential | House of Lords | Yes | [1999] 2 AC 1 | England and Wales | Cited for the principle of the estate costs rule. |
| Re Atlantic Computer Systems plc | Court of Appeal | Yes | [1992] Ch 505 | England and Wales | Cited regarding the reasoning that a debt incurred for the benefit of the insolvent estate should be borne by those for whose benefit the insolvent estate is being administered. |
| Rowland & Ors v Gulfpac Limited | Not Available | Yes | [1999] Lloyd’s Rep Bank 86 | Not Available | Cited regarding costs incurred in defending or prosecuting actions are costs incurred in defending or prosecuting actions and are not costs incurred or sustained in or about the execution of a director’s duties. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50) | Singapore |
| Companies Act (Cap 50) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Scheme of Arrangement
- Indemnity Costs
- Proofs of Debt
- Liquidators
- Creditors
- Article 110
- Costs Escrow Account
- Litigation Escrow Account
- Auditors
- Liquidation
- Singapore Scheme
15.2 Keywords
- Scheme of Arrangement
- Indemnity Costs
- Auditors
- Liquidation
- Singapore
- Companies Act
17. Areas of Law
16. Subjects
- Insolvency
- Corporate Law
- Auditing
- Schemes of Arrangement