Deutsche Bank v Asia Pulp & Paper: Judicial Management Order Dispute

Deutsche Bank AG and BNP Paribas petitioned the High Court of Singapore for a judicial management order against Asia Pulp & Paper Company Ltd (APP). The court, presided over by Justice Lai Siu Chiu, dismissed the petition, citing concerns about the effectiveness of judicial management given APP's complex international structure and ongoing debt restructuring efforts. The court favored allowing APP to continue with its consensual restructuring plan, led by IBRA, while cautioning that a lack of progress could lead to a more favorable reception of a future petition.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Petition dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Deutsche Bank sought a judicial management order against Asia Pulp & Paper. The court dismissed the petition, favoring consensual debt restructuring.

1.7 Decision Date

30 October 2002

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Deutsche Bank AG	Petitioner	Corporation	Petition dismissed	Lost	Alvin Yeo of Wong Partnership Nishith K Shetty of Wong Partnership N Ponniya of Wong Partnership
BNP Paribas (formerly known as Banque Nationale De Paris)	Petitioner	Corporation	Petition dismissed	Lost	Alvin Yeo of Wong Partnership Nishith K Shetty of Wong Partnership N Ponniya of Wong Partnership
Asia Pulp & Paper Company Ltd	Respondent	Corporation	Petition dismissed	Won	Davinder Singh of Drew & Napier LLC Sushil Nair of Drew & Napier LLC Blossom Hing of Drew & Napier LLC Raymond Lam of Drew & Napier LLC Tan Boon Khai of Drew & Napier LLC Julian Kwek of Drew & Napier LLC

3. Judges

Judge Name	Title	Delivered Judgment
Lai Siu Chiu	Judge	Yes

4. Counsels

Counsel Name	Organization
Alvin Yeo	Wong Partnership
Nishith K Shetty	Wong Partnership
N Ponniya	Wong Partnership
Davinder Singh	Drew & Napier LLC
Sushil Nair	Drew & Napier LLC
Blossom Hing	Drew & Napier LLC
Raymond Lam	Drew & Napier LLC
Tan Boon Khai	Drew & Napier LLC
Julian Kwek	Drew & Napier LLC

4. Facts

APP is an investment holding company with its principal business in the pulp and paper industry.
APP has significant debts, including approximately US$193m owed to Deutsche Bank and US$20m owed to BNP Paribas.
APP announced a debt repayment standstill.
APP appointed professional and legal advisors to develop a debt restructuring plan.
APP's creditors were organized into committees to represent their interests.
There were allegations of financial irregularities and questionable transactions involving APP and related companies.
IBRA was involved in the debt restructuring process.

5. Formal Citations

Deutsche Bank AG and Another v Asia Pulp & Paper Company Ltd, OP 2/2002/D, [2002] SGHC 257

6. Timeline

Date	Event
1994-10-12	Asia Pulp & Paper Ltd incorporated in Singapore
1995-01-01	APP granted OHQ status by Singapore's Economic Development Board
1997-03-19	APP International Finance (BVI) Ltd entered into a Master Agreement with Bankers Trust International PLC
1997-03-19	APP guaranteed the Master Agreement
1997-08-08	Swap transaction between APP-IF and Bankers Trust
1999-01-01	PT Bank Internasional Indonesia Tbk placed under the control of Indonesian authorities
2000-03-30	APP guaranteed a term facility of US$264m pursuant to a Deed of Guarantee
2000-07-28	Master Agreement novated to Deutsche Bank
2000-07-28	Rights under the Guarantee assigned to Deutsche Bank
2000-10-13	APP-IF failed to pay Deutsche Bank a sum of US$1,877,204.98
2000-11-22	Deed of Forbearance signed between APP-IF, APP and Deutsche Bank
2001-02-07	Deutsche Bank served a statutory notice of demand on APP
2001-03-12	APP issued a press release announcing a debt repayment standstill
2001-03-27	Fuji Bank Ltd made a demand for payment from Indah Kiat
2001-04-02	Fuji Bank made a second demand from APP
2001-04-04	Trading in APP's American Depository shares suspended
2001-08-10	APP's American Depository shares delisted from the New York Stock Exchange
2002-02-01	APP presented a debt restructuring plan
2002-05-02	Creditors presented counter-proposals
2002-06-23	Petition filed jointly by Deutsche Bank AG and BNP Paribas
2002-08-22	Oral judgment delivered dismissing the Petition
2002-10-31	Decision Date

7. Legal Issues

Judicial Management Order
- Outcome: The court determined that the making of a judicial management order would not likely achieve the purposes outlined in s 227B(b) of the Companies Act.
- Category: Procedural
- Sub-Issues:
  - Reasonable probability of rehabilitating the company
  - Interests of creditors better served than by winding up
  - Advantageous realization of assets

8. Remedies Sought

Judicial Management Order

9. Cause of Actions

Application for Judicial Management Order

10. Practice Areas

Commercial Litigation
Insolvency
Debt Restructuring

11. Industries

Pulp and Paper
Financial Services

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Re Genesis Technologies International (S) Pte Ltd	High Court	Yes	[1994] 3 SLR 390	Singapore	Cited to support the contention that the interests of creditors are paramount where a debtor company is insolvent.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act Cap 50	Singapore
s 227A of the Companies Act Cap 50	Singapore
s 227B of the Companies Act Cap 50	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Judicial Management
Debt Restructuring
Debt Standstill
Consensual Restructuring
IBRA
Sinar Mas Group
KPMG Report
Wood Companies
BVI Companies

15.2 Keywords

Judicial Management
Debt
Restructuring
Insolvency
Singapore
Asia Pulp & Paper

17. Areas of Law

Area Name	Relevance Score
Judicial Management	90
Debt Restructuring	80
Company Law	75
Bankruptcy	60
Banking and Finance	50
Corporate Governance Disputes	40
Arbitration	30
Contract Law	25

16. Subjects

Insolvency
Corporate Law
Debt Restructuring