Raiffeisen Zentralbank v Continental Chemical: Adjournment of Winding Up Proceedings for Scheme of Arrangement

In Singapore, the High Court heard an application by Continental Chemical Corp Pte Ltd for an adjournment of winding up proceedings initiated by Raiffeisen Zentralbank Osterreich Aktiengesellschaft. The court, presided over by Justice Choo Han Teck, granted a five-month adjournment to allow the company to finalize negotiations for a scheme of arrangement with potential investors and creditors. The decision considered the support of secured creditors and the limited prospect of recovery for unsecured creditors in a winding up scenario.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Adjournment of winding up proceedings granted for five months.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The High Court granted a five-month adjournment for Continental Chemical's winding up proceedings to allow for a proposed scheme of arrangement.

1.7 Decision Date

7 March 2010

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Continental Chemical Corp Pte Ltd	Respondent	Corporation	Adjournment Granted	Won	Mark Tan of Stamford Law Corporation Ashok Kumar of Stamford Law Corporation Jason Yang of Stamford Law Corporation
Raiffeisen Zentralbank Osterreich AG	Applicant	Corporation	Adjournment Granted	Neutral	Andrew Chan of Allen & Gledhill LLP Guo Zhuo Neng of Allen & Gledhill LLP

3. Judges

Judge Name	Title	Delivered Judgment
Choo Han Teck	Judge	Yes

4. Counsels

Counsel Name	Organization
Mark Tan	Stamford Law Corporation
Ashok Kumar	Stamford Law Corporation
Jason Yang	Stamford Law Corporation
Andrew Chan	Allen & Gledhill LLP
Guo Zhuo Neng	Allen & Gledhill LLP

4. Facts

Continental Chemical Corp Pte Ltd was undisputedly insolvent.
The company had financial problems from the third quarter of financial year 2008.
As of 31 December 2008, the company's total liabilities amounted to US$356,853,982.
RZ Bank served a statutory demand on the company for the repayment of US$3,567,097.62.
The company did not repay RZ Bank.
The company was in negotiations with potential investors to raise capital for a restructured entity.
Secured creditors supported the company's application for an adjournment.

5. Formal Citations

Raiffeisen Zentralbank Osterreich AG v Continental Chemical Corp Pte Ltd, Originating Summons No 463 of 2009, [2010] SGHC 71

6. Timeline

Date	Event
2008-07-01	Company experienced financial problems from the third quarter of financial year 2008.
2008-12-31	Company's total liabilities amounted to US$356,853,982.
2009-02-24	RZ Bank served a statutory demand on the Company for US$3,567,097.62.
2009-05-07	RZ Bank filed an application to compulsorily wind up the Company.
2009-07-12	Company filed an application for a stay of proceedings and for leave to convene creditors’ meetings.
2009-12-24	Investors entered into a non-binding Heads of Agreement with the Company and its secured creditors.
2010-01-07	Stay of all further proceedings until 7 January 2010.
2010-01-14	Company applied for a further adjournment of six months.
2010-03-08	High Court granted a five-month adjournment to the Company.

7. Legal Issues

Adjournment of Winding Up Proceedings
- Outcome: The court granted a five-month adjournment to allow the company to complete negotiations and present a scheme of arrangement to the creditors.
- Category: Procedural

8. Remedies Sought

Adjournment of Winding Up Proceedings

9. Cause of Actions

Winding Up Application

10. Practice Areas

Insolvency
Commercial Litigation

11. Industries

Chemical

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
BNP Paribas v Jurong Shipyard Pte Ltd	High Court	Yes	[2009] 2 SLR(R) 949	Singapore	Cited for the principle that a creditor who has successfully proven its debt against a company is entitled to a winding up order ex debito justitiae in the absence of a good reason for not granting the order.
Re P & J Macrae Ltd	English Court of Appeal	Yes	[1961] 1 WLR 229	United Kingdom	Cited for the principle that the court’s discretion under s 125(1) of the Insolvency Act 1986 (c 45)(UK) is complete and unfettered.
Re Cheery City Contractors Ltd	N/A	Yes	[2004] 3 HKC 165	Hong Kong	Cited as an example of a case where an adjournment application was rejected because the general principles of a proposed scheme of arrangement had not been presented to the creditors.
Re Demaglass Holdings Ltd (Winding Up Petition: Application for Adjournment)	N/A	Yes	[2001] 2 BCLC 633	N/A	Cited for the principles guiding the exercise of the court’s discretion in winding up applications, including considering the benefit to the applicant and the views of creditors.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed) s 257(1)	Singapore
Companies Act s 210(10)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Winding up
Adjournment
Scheme of arrangement
Insolvency
Creditors
Secured creditors
Unsecured creditors
Statutory demand

15.2 Keywords

Winding up
Adjournment
Scheme of arrangement
Insolvency
Creditors

17. Areas of Law

Area Name	Relevance Score
Winding Up	95
Scheme of Arrangement	75
Company Law	60
Bankruptcy	40
Contract Law	20
Arbitration	10

16. Subjects

Insolvency
Corporate Law
Civil Procedure