United Overseas Bank v Ng Huat Foundations: Stay of Winding-Up Proceedings and Scheme of Arrangement under Companies Act
United Overseas Bank Ltd petitioned to wind up Ng Huat Foundations Pte Ltd in the High Court of Singapore. Ng Huat Foundations applied for a stay of the winding-up proceedings pending the outcome of its appeal against the rejection of its application for a scheme of arrangement. Andrew Phang Boon Leong JC dismissed the application for a stay and granted the winding-up petition, finding that the appeal was an abuse of process and a delaying tactic.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application for stay of the petition for winding up of the respondent dismissed. Petition for winding up of the respondent granted.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
UOB sought to wind up Ng Huat Foundations. The court considered whether to stay the winding-up pending appeal against rejection of a scheme of arrangement.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| United Overseas Bank Ltd | Petitioner | Corporation | Petition for winding up granted | Won | Chan Kia Pheng, Ang Keng Ling |
| Ng Huat Foundations Pte Ltd | Respondent | Corporation | Application for stay dismissed, Winding up ordered | Lost, Lost | P Padman, Niko Issac |
| Samwoh Resources Pte Ltd | Supporting Creditor | Corporation | Neutral | Neutral | Ronald Choo, Corrinne Chia |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Phang Boon Leong | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Chan Kia Pheng | Khattar Wong and Partners |
| Ang Keng Ling | Khattar Wong and Partners |
| P Padman | Tito Issac and Co |
| Niko Issac | Tito Issac and Co |
| Ronald Choo | Rajah and Tann |
| Corrinne Chia | Rajah and Tann |
| Sunari bin Kateni | Insolvency and Public Trustee's Office |
4. Facts
- United Overseas Bank Ltd petitioned to wind up Ng Huat Foundations Pte Ltd.
- Ng Huat Foundations applied for a stay of the winding-up proceedings.
- The respondent was appealing against a decision rejecting its application for a scheme of arrangement.
- The winding-up petition had been filed on 30 July 2004 and the present case was the sixth hearing.
- The company was woefully insolvent.
- Lai J rejected the respondent’s application for a scheme of arrangement with creditors under s 210 of the Companies Act for two main reasons: material non-disclosures and the fact that two of the main creditors opposed the proposed scheme of arrangement and represented more than one-fourth in value of the total debts owed.
- The respondent invoked yet another procedural device to stymie the enforcement of the arbitration award.
5. Formal Citations
- United Overseas Bank Ltd v Ng Huat Foundations Pte Ltd, CWU 163/2004, SIC 444/2005, [2005] SGHC 50
6. Timeline
| Date | Event |
|---|---|
| Winding-up petition filed by the petitioner | |
| Lai Kew Chai J rejected the respondent's application for a scheme of arrangement | |
| Ms. Lee Ah Poh's affidavit filed regarding arbitration proceedings | |
| Application for stay of winding-up petition dismissed; winding-up petition granted |
7. Legal Issues
- Stay of Winding-Up Proceedings
- Outcome: The court dismissed the application for a stay, finding that the appeal against the rejection of the scheme of arrangement was an abuse of process.
- Category: Procedural
- Sub-Issues:
- Abuse of process of court
- Delaying tactics
- Scheme of Arrangement
- Outcome: The court considered the principles for approving a scheme of arrangement, including fairness to creditors and the need for full disclosure.
- Category: Substantive
- Sub-Issues:
- Fairness to creditors
- Material non-disclosure
- Related creditors
- Locus Standi
- Outcome: The court found that the petitioner and supporting creditor had the requisite locus standi.
- Category: Procedural
8. Remedies Sought
- Winding-up order
- Stay of winding-up proceedings
9. Cause of Actions
- Winding up
- Application for Stay of Proceedings
10. Practice Areas
- Winding-Up
- Schemes of Arrangement
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Halley’s Departmental Store Pte Ltd | Singapore High Court | Yes | [1996] 2 SLR 70 | Singapore | Cited for the principle that a scheme of arrangement must benefit creditors and not deprive them of advantages they would get by winding up the company. |
| Lee Sian Hee v Oh Kheng Soon | Singapore Court of Appeal | Yes | [1992] 1 SLR 77 | Singapore | Cited in the context of attempts to stay the execution of a judgment or a mandatory injunction whilst an appeal was pending, and for the principle that a bald assertion of the likelihood of success is not adequate for granting a stay. |
| Swiss Singapore Overseas Enterprise Pte Ltd v Navalmar UK Ltd (No 2) | Singapore High Court | Yes | [2003] 1 SLR 688 | Singapore | Cited in the context of attempts to stay the execution of a judgment or a mandatory injunction whilst an appeal was pending. |
| Sri Hartamas Development Sdn Bhd v MBf Finance Bhd | N/A | Yes | [1990] 2 MLJ 31 | Malaysia | Cited to demonstrate that there had in fact been the requisite locus standi. |
| Re Foursea Construction (M) Sdn Bhd | N/A | Yes | [1998] 4 MLJ 99 | Malaysia | Cited to demonstrate that there had in fact been the requisite locus standi. |
| Eastern Pretech Pte Ltd v Kin Lin Builders Pte Ltd | Singapore High Court | Yes | [2004] SGHC 195 | Singapore | Cited to show that if the scheme of arrangement were to be put to the vote at a meeting of creditors pursuant to s 210 of the Companies Act, it would certainly be defeated. |
| In re Wedgwood Coal and Iron Company | N/A | Yes | (1877) 6 Ch D 627 | England | Cited to show that it is not enough merely to obtain the statutory majority. The Court, before it gives its sanction, must be satisfied that the resolution has been carried bonâ fide by persons who really have regard to the interests of the company. |
| In re Alabama, New Orleans, Texas and Pacific Junction Railway Company | English Court of Appeal | Yes | [1891] 1 Ch 213 | England | Cited to show what the Court has to do is to see, first of all, that the provisions of that statute have been complied with; and, secondly, that the majority has been acting bonâ fide. |
| Northern Elevator Manufacturing Sdn Bhd v United Engineers (Singapore) Pte Ltd (No 2) | Singapore Court of Appeal | Yes | [2004] 2 SLR 494 | Singapore | Cited for the basic principles which ought to guide the court in granting leave to appeal vis-à-vis a point of law, in so far as arbitration proceedings are concerned. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 1994 Rev Ed) s 254(1)(e) | Singapore |
| Companies Act (Cap 50, 1994 Rev Ed) s 254(2)(a) | Singapore |
| Companies Act s 210 | Singapore |
| Companies Act s 210(3) | Singapore |
| Companies Act ss 291 | Singapore |
| Companies Act s 267 | Singapore |
| Arbitration Act (Cap 10, 1985 Rev Ed) s 28 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Winding up
- Scheme of arrangement
- Stay of proceedings
- Procedural justice
- Substantive justice
- Material non-disclosure
- Related creditors
- Abuse of process
- Legal futility
- Locus standi
15.2 Keywords
- winding up
- stay of proceedings
- scheme of arrangement
- insolvency
- companies act
16. Subjects
- Insolvency
- Companies
- Civil Procedure
17. Areas of Law
- Insolvency Law
- Company Law
- Civil Procedure