Neo Corp v Neocorp Innovations: Judicial Management vs. Winding Up & Right of Action

In Neo Corp Pte Ltd (under judicial management) v Neocorp Innovations Pte Ltd, the High Court of Singapore addressed whether a judicial manager's right of action under Section 227T of the Companies Act to challenge a transaction as an unfair preference or undervalue continues to reside in the liquidator after the company is wound up. The court, presided over by Andrew Phang Boon Leong JC, held that the right of action does not transfer to the liquidator, granting the creditor's applications to prevent the liquidators from continuing the action and to strike out the original application.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Creditor's applications granted.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Floating charge dispute. Court held liquidator cannot continue judicial manager's action to challenge transaction as unfair preference/undervalue after winding up.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Neocorp Innovations Pte LtdRespondentCorporationApplication GrantedWon
Neo Corp Pte Ltd (under judicial management)ApplicantCorporationApplication DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Andrew Phang Boon LeongJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Chan Kia PhengKhattar Wong
Shaun Koh Kang MingKhattar Wong
Edmund KronenburgTan Peng Chin LLC
Leong Kit WanTan Peng Chin LLC

4. Facts

  1. Neo Corp was placed under judicial management on 2004-05-05.
  2. The judicial managers applied to set aside a floating charge created by Neo Corp in favor of the creditor.
  3. The judicial managers alleged the floating charge was both a transaction at an undervalue and an unfair preference.
  4. A petition was presented to wind up Neo Corp.
  5. The winding-up order authorized the liquidators to continue the application commenced by the judicial managers.
  6. The creditor brought proceedings to declare that the liquidators could not be authorized to continue the action.
  7. The creditor also applied for the original application to be struck out.

5. Formal Citations

  1. Neo Corp Pte Ltd (under judicial management) v Neocorp Innovations Pte Ltd and Another Application, OS 1535/2004, SIC 1761/2005, CWU 2/2005, SIC 1741/2005, [2005] SGHC 167

6. Timeline

DateEvent
Floating charge created by Neo Corp in favor of the creditor.
Judicial management order made for Neo Corp Pte Ltd.
Judicial managers applied under s 227T of the Companies Act to set aside the floating charge.
Winding-up order granted for Neo Corp Pte Ltd.
High Court held that liquidators could not be authorized to continue action under OS 1535/2004.

7. Legal Issues

  1. Transferability of Right of Action
    • Outcome: The court held that the right of action residing in a judicial manager under s 227T of the Companies Act does not continue to reside in a liquidator once the company is wound up.
    • Category: Substantive
  2. Unfair Preference
    • Outcome: The court did not make a definitive ruling on whether an unfair preference occurred, but the legal issue was central to the dispute.
    • Category: Substantive
  3. Transaction at an Undervalue
    • Outcome: The court did not make a definitive ruling on whether a transaction at an undervalue occurred, but the legal issue was central to the dispute.
    • Category: Substantive

8. Remedies Sought

  1. Declaration that liquidators cannot continue action
  2. Striking out of Originating Summons No 1535 of 2004

9. Cause of Actions

  • Avoidance of Floating Charge
  • Unfair Preference
  • Transaction at an Undervalue

10. Practice Areas

  • Commercial Litigation
  • Insolvency Litigation

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Cendekia Candranegara Tjiang v Yin Kum ChoyHigh CourtYes[2002] 4 SLR 48SingaporeCited regarding the powers of liquidators versus judicial managers, but distinguished as not directly supporting the company's argument.
Re An Application by J G A Tucker and Reid Murray Developments (Qld) Pty LtdFull CourtYes[1969] Qd R 193QueenslandCited as a Commonwealth precedent closest in factual context and legal relevance, supporting the conclusion that a liquidator cannot continue an action initiated by a judicial manager.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 1994 Rev Ed) s 227TSingapore
Companies Act (Cap 50, 1994 Rev Ed) s 329Singapore
Bankruptcy Act 1995 ss 98, 99, 103Singapore
Companies Act (Cap 50, 1994 Ed) s 272(2)Singapore
Companies Act (Cap 50, 1994 Ed) s 272(2)(a)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Judicial Management
  • Winding Up
  • Floating Charge
  • Unfair Preference
  • Transaction at Undervalue
  • Right of Action
  • Liquidator
  • Judicial Manager
  • Companies Act
  • Relation Back

15.2 Keywords

  • judicial management
  • winding up
  • companies act
  • insolvency
  • liquidator
  • judicial manager
  • right of action

17. Areas of Law

Area NameRelevance Score
Winding Up95
Judicial Management90
Insolvency Law85
Company Law70
Commercial Disputes30
Floating Charge25

16. Subjects

  • Insolvency
  • Company Law
  • Civil Procedure