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

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Deutsche Bank AGPetitionerCorporationPetition dismissedLostAlvin Yeo, Nishith K Shetty, N Ponniya
BNP Paribas (formerly known as Banque Nationale De Paris)PetitionerCorporationPetition dismissedLostAlvin Yeo, Nishith K Shetty, N Ponniya
Asia Pulp & Paper Company LtdRespondentCorporationPetition dismissedWonDavinder Singh, Sushil Nair, Julian Kwek, Blossom Hing, Raymond Lam, Tan Boon Khai

3. Judges

Judge NameTitleDelivered Judgment
Lai Siu ChiuJudgeYes

4. Counsels

Counsel NameOrganization
Alvin YeoWong Partnership
Nishith K ShettyWong Partnership
N PonniyaWong Partnership
Davinder SinghDrew & Napier LLC
Sushil NairDrew & Napier LLC
Julian KwekDrew & Napier LLC
Blossom HingDrew & Napier LLC
Raymond LamDrew & Napier LLC
Tan Boon KhaiDrew & Napier LLC

4. Facts

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

5. Formal Citations

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

6. Timeline

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

7. Legal Issues

  1. 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

  1. 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 NameCourtAffirmedCitationJurisdictionSignificance
Re Genesis Technologies International (S) Pte LtdHigh CourtYes[1994] 3 SLR 390SingaporeCited 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 NameJurisdiction
Companies Act Cap 50Singapore
s 227A of the Companies Act Cap 50Singapore
s 227B of the Companies Act Cap 50Singapore

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

16. Subjects

  • Insolvency
  • Corporate Law
  • Debt Restructuring

17. Areas of Law

  • Insolvency Law
  • Company Law
  • Debt Restructuring