RBS v TT International: Scheme of Arrangement - Creditor Classification, Voting Rights, Scheme Manager Duties

The Royal Bank of Scotland NV and Oversea-Chinese Banking Corporation Limited appealed the High Court's approval of TT International Ltd's scheme of arrangement. The Court of Appeal allowed the appeal, citing improper creditor classification and scheme manager conduct. The court ordered new creditors' meetings with specific directions on voting rights, debt disputes, and the scheme manager's role.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal decision on scheme of arrangement, addressing creditor classification, voting rights, and scheme manager duties.

1.7 Decision Date

30 January 2012

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Oversea-Chinese Banking Corporation Limited	Appellant	Corporation	Appeal Allowed	Won	Lee Eng Beng of Rajah & Tann LLP Raelene Pereira of Rajah & Tann LLP Nigel Pereira of Rajah & Tann LLP Low Poh Ling of Rajah & Tann LLP
TT International Ltd	Respondent	Corporation	Appeal Allowed	Lost	Alvin Yeo of Wong Partnership LLP Chang Man Phing of Wong Partnership LLP Lawrence Foo of Wong Partnership LLP Tan Yee Siong of Wong Partnership LLP
The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV)	Appellant	Corporation	Appeal Allowed	Won	Lee Eng Beng of Rajah & Tann LLP Raelene Pereira of Rajah & Tann LLP Nigel Pereira of Rajah & Tann LLP Low Poh Ling of Rajah & Tann LLP
Ho Lee Construction Pte Ltd	Appellant	Corporation	Appeal Allowed	Won	Thio Shen Yi of TSMP Law Corporation Doris Chia of David Lim & Partners Aveline Chan of David Lim & Partners

3. Judges

Judge Name	Title	Delivered Judgment
Chan Sek Keong	Chief Justice	No
Andrew Phang Boon Leong	Justice of the Court of Appeal	No
V K Rajah	Justice of the Court of Appeal	Yes

4. Counsels

Counsel Name	Organization
Lee Eng Beng	Rajah & Tann LLP
Raelene Pereira	Rajah & Tann LLP
Nigel Pereira	Rajah & Tann LLP
Low Poh Ling	Rajah & Tann LLP
Alvin Yeo	Wong Partnership LLP
Chang Man Phing	Wong Partnership LLP
Lawrence Foo	Wong Partnership LLP
Tan Yee Siong	Wong Partnership LLP
Thio Shen Yi	TSMP Law Corporation
Doris Chia	David Lim & Partners
Aveline Chan	David Lim & Partners

4. Facts

TT International proposed a scheme of arrangement to compromise debts.
The scheme involved a Reverse Dutch Auction, Sustainable Debt, and Redeemable Convertible Bonds.
Oversea-Chinese Banking Corporation Limited and Ho Lee Construction objected.
The Scheme Manager was also nominee for IVAs filed by Mr. Sng and Ms. Tong.
Chairman's Report: 84.81% of creditors, representing 75.06% of debt value, voted for the Scheme.
PwC reviewed the Scheme Manager's assessment of proofs of debt.
The Judge approved the Scheme.

5. Formal Citations

The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appeal, Civil Appeal Nos 44 of 2010 and 47 of 2010, [2012] SGCA 9

6. Timeline

Date	Event
1984-10-01	TT International Limited incorporated.
1995-01-01	AKIRA trademark registered.
2000-06-01	TT International listed on Singapore Exchange.
2008-03-01	Ho Lee Construction commenced building works.
2008-10-01	Ho Lee Construction suspended building works.
2008-10-31	TT International appointed nTan Corporate Advisory as financial advisor.
2008-10-31	TT International appointed WongPartnership as legal advisor.
2008-10-31	TT International announced standstill of repayments.
2008-12-04	PricewaterhouseCoopers appointed as Special Accountant.
2009-01-19	Ho Lee filed winding up application.
2009-01-29	TT International applied for court approval to summon creditors' meeting.
2009-07-21	TT International granted extension to call creditors' meeting.
2009-09-09	Scheme documents despatched to creditors.
2009-09-28	TT International extended deadline for proofs of debt.
2009-10-16	Scheme Meeting held.
2009-10-26	TT International applied for more time to review proofs of debt.
2009-12-17	Chairman's Report on Scheme Meeting issued.
2010-01-01	Rajah & Tann sought copies of proofs of debt.
2010-02-04	PricewaterhouseCoopers appointed to review proofs of debt assessment.
2010-02-12	PricewaterhouseCoopers rendered its report.
2010-08-18	Further payments stayed pursuant to the Scheme.
2012-01-31	Court of Appeal allowed appeals, ordered new creditors’ meetings.
2010-09-24	Further Meetings held.
2010-10-05	Parties heard again.
2010-10-13	Court sanctioned the Scheme, subject to alterations.

7. Legal Issues

Classification of Creditors
- Outcome: The court provided guidance on when scheme creditors should be classified differently for voting purposes, emphasizing the dissimilarity of rights principle and the need to consider the impact of the scheme on different classes of creditors.
- Category: Substantive
- Sub-Issues:
  - Dissimilarity of legal rights
  - Treatment of contingent creditors
  - Treatment of subordinated claims
  - Rights of first refusal
  - Treatment of related party creditors
  - Treatment of wholly owned subsidiaries
- Related Cases:
  - [2001] 3 HKLRD 634
  - [2004] BCC 342
  - [2005] BCC 29
  - [2006] 1 BCLC 665
  - [2007] 1 All ER 851
  - [2003] 3 SLR(R) 629
Voting Rights of Creditors
- Outcome: The court clarified the rights of creditors to review proofs of debt, the timing of notifications regarding admission or rejection of proofs, and the ability to appeal the chairman's decisions. The court also addressed the discounting of votes for related parties.
- Category: Procedural
- Sub-Issues:
  - Right to review proofs of debt
  - Notification of admission/rejection of proofs
  - Appeal of chairman's decisions
  - Discounting votes of related parties
- Related Cases:
  - [2003] 3 SLR(R) 629
  - [2001] 3 HKLRD 634
Duties of a Scheme Manager
- Outcome: The court emphasized the importance of objectivity, independence, and transparency in the scheme manager's role, particularly in adjudicating proofs of debt and conducting creditors' meetings. The court also addressed potential conflicts of interest.
- Category: Substantive
- Sub-Issues:
  - Conflict of interest
  - Objectivity and independence
  - Transparency
- Related Cases:
  - [2009] 4 SLR(R) 458

8. Remedies Sought

Approval of Scheme of Arrangement
Rejection of Scheme of Arrangement

9. Cause of Actions

Breach of Contract
Corporate Guarantee
Indemnity

10. Practice Areas

Commercial Litigation
Insolvency
Corporate Restructuring

11. Industries

Consumer Electronics
Construction

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Re TT International Ltd	High Court	Yes	[2010] SGHC 177	Singapore	Appeal from this decision. The High Court Judge approved the Respondent’s scheme of arrangement notwithstanding vigorous objections made by a number of creditors, including the two appellants.
The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd	Court of Appeal	Yes	[2008] 3 SLR(R) 121	Singapore	Affirmed agreement with Street J’s summary of the purpose of s 210 of the Companies Act.
Re Norfolk Island And Byron Bay Whaling Co. Ltd.	Supreme Court of New South Wales	Yes	(1969) 90 WN (Pt 1) (NSW) 351	New South Wales	Cited for Street J's summary of the purpose of s 181 of the Companies Act 1961 (NSW), the statutory inspiration for Singapore's s 210.
Re Hawk Insurance Co Ltd	England and Wales Court of Appeal	Yes	[2001] 2 BCLC 480	England and Wales	Instructively outlined the process by which a compromise or arrangement became binding on the company and its creditors via s 425 of the Companies Act 1985 (c 6) (UK).
Practice Statement (Companies: Schemes of Arrangement)	England and Wales High Court	Yes	[2002] 1 WLR 1345	England and Wales	States that it is the applicant’s responsibility to determine whether more than one meeting of creditors is required by the scheme and for that purpose, to notify persons affected by the scheme of its purpose and the meetings which the applicant considers will be required.
UDL Argos Engineering & Heavy Industries Co Ltd & Others v Li Oi Lin & Others	Hong Kong Court of Final Appeal	Yes	[2001] 3 HKLRD 634	Hong Kong	If the scheme creditors’ meeting(s) are not properly conducted, the court has no jurisdiction to sanction the proposed scheme.
Re Telewest Communications plc	England and Wales High Court	Yes	[2004] BCC 342	England and Wales	In considering the primary position of the opposing bondholders, it is important to keep in mind the function of the court at this stage. This is an application by the companies for leave to convene meetings to consider the schemes. It is emphatically not a hearing to consider the merits and fairness of the schemes.
Re Telewest Communications plc	England and Wales Court of Appeal	Yes	[2005] BCC 29	England and Wales	Approved by the English Court of Appeal in Re Telewest Communications plc [2005] BCC 29 (“Re Telewest Communications plc”) at [9]
Re Ng Huat Foundations Pte Ltd	High Court	Yes	[2005] SGHC 112	Singapore	Where there is no realistic prospect of a scheme receiving the requisite approval, the court should not act in vain in granting the application for meetings to be convened.
In re Dorman, Long and Company Limited	England and Wales High Court	Yes	[1934] Ch 635	England and Wales	The explanatory circular must be “perfectly fair and, as far as possible, give all the information reasonably necessary to enable the recipients to determine how to vote”
ERPIMA SA v Chee Yoh Chuang and another	Court of Appeal	Yes	[1997] 1 SLR(R) 923	Singapore	The entire process of proof, admission or rejection is ordinarily completed before the scheme creditors’ meeting(s) is held.
Daewoo Singapore Pte Ltd v CEL Tractors Pte Ltd	Court of Appeal	Yes	[2001] 2 SLR(R) 791	Singapore	The court will not sanction a scheme if the company and/or its majority creditors are not acting bona fide.
Fustar Chemicals Ltd (Hong Kong) v Liquidator of Fustar Chemicals Pte Ltd	Court of Appeal	Yes	[2009] 4 SLR(R) 458	Singapore	The duty of the liquidator in assessing a proof of debt is to ensure that while genuine debts are admitted and false claims are rejected, he must act fairly in discharging his duties. He must, at all times, be independent and hold an even hand in dealing with the often competing interests of creditors, contributories and his appointers.
Wah Yuen Electrical Engineering Pte Ltd v Singapore Cables Manufacturers Pte Ltd	Court of Appeal	Yes	[2003] 3 SLR(R) 629	Singapore	An informed voting process can only take place if all material information a creditor might need to determine how to vote is made available.
Re Econ Corp Ltd	High Court	Yes	[2004] 1 SLR(R) 273	Singapore	The High Court took the view (at [82]) that the contingent creditors in that case should have been separately classed for voting purposes.
Re Horizon Knowledge Solutions Pte Ltd	High Court	Yes	[2004] SGHC 270	Singapore	Relied on Wah Yuen.
Selim v McGrath	Supreme Court of New South Wales	Yes	[2003] NSWSC 927	New South Wales	In considering the admission and rejection of proofs of debt by the chairman of a s 210 creditors’ meeting, it is worth bearing in mind the commonsensical procedure in these provisions.
Bacnet Pty Ltd and Others v Lift Capital Partners Pty Ltd (in liq) and Others	Full Court of the Federal Court of Australia	Yes	[2010] FCAFC 36	Australia	Endorsed Selim v McGrath.
Re UDL Holdings Ltd	High Court	Yes	[2001] 1 HKLRD 156	Hong Kong	If it is impossible to ascribe any sensible value to a claim, the chairman should attribute a nil value to it and the claim should be rejected.
Re The British Aviation Insurance Co Ltd	England and Wales High Court	Yes	[2006] 1 BCLC 665	England and Wales	The appropriate comparator there was a continuing solvent run-off.
Re T&N and others (No 3)	England and Wales High Court	Yes	[2007] 1 All ER 851	England and Wales	The proposed scheme arose from settlement discussions in the context of disputed asbestos-related claims against employers’ liability insurers.
In re Sass	English Divisional Court	Yes	[1896] 2 QB 12	England and Wales	A surety for part of a debt must ordinarily pay that entire part before he can stand in the shoes of the principal creditor and prove against the principal debtor for that part of the debt.
Milverton Group Ltd v Warner World Ltd	England and Wales Court of Appeal	Yes	[1995] 2 EGLR 28	England and Wales	The payment of rent by a surety discharged the lessee’s obligation to pay the same rent.
Re Landmark Corporation Ltd	Supreme Court of New South Wales	Yes	[1968] 1 NSWR 759	New South Wales	The votes of wholly owned subsidiaries should be discounted to zero.
In re Hellenic & General Trust Ltd	England and Wales High Court	Yes	[1976] 1 WLR 123	England and Wales	A scheme of arrangement was used to effect a take-over.
Re BTR Plc	England and Wales High Court	Yes	[1999] 2 BCLC 675	England and Wales	The true ratio of that case was that M’s views were effectively discounted since, in substance, the scheme only affected the shares which did not belong to M.
Re BTR Plc	England and Wales Court of Appeal	Yes	[2000] 1 BCLC 740	England and Wales	The Court of Appeal’s decision in Re BTR Plc [2000] 1 BCLC 740 was consistent with Parker J’s suggestion.
Brash Holdings Ltd (Administrator appointed) and others v Katile Pty Ltd and another	Supreme Court of Victoria	Yes	[1996] 1 VR 24	Victoria	Admitted contingent claims are valued before they are counted.
Sovereign Life Assurance Company v Dodd	England and Wales Court of Appeal	Yes	[1892] 2 QB 573	England and Wales	It makes the majority of the creditors or of a class of creditors bind the minority; it exercises a most formidable compulsion upon dissentient, or would-be dissentient, creditors; and it therefore requires to be construed with care, so as not to place in the hands of some of the creditors the means and opportunity of forcing dissentients to do that which it is unreasonable to require them to do, or of making a mere jest of the interests of the minority.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed) s 210	Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 210(3)	Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 250(1)(g)	Singapore
Bankruptcy Rules (Cap 20, R 1, 2006 Rev Ed) Rule 179	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Scheme of Arrangement
Scheme Creditors
Reverse Dutch Auction
Sustainable Debt
Redeemable Convertible Bonds
Rights of First Refusal
Proofs of Debt
Ascertainment Date
Scheme Manager
Monitoring Committee
Contingent Claims
Subordinated Claims
Related Party Creditors
Wholly Owned Subsidiaries

15.2 Keywords

Scheme of Arrangement
Creditor Classification
Voting Rights
Insolvency
Singapore
Corporate Restructuring

17. Areas of Law

Area Name	Relevance Score
Schemes of Arrangement	85
Corporate Restructuring	75
Bankruptcy	70
Winding Up	65
Company Law	60
Debt Restructuring	55
Reverse Dutch Auction	40
Contract Law	30
Arbitration	20

16. Subjects

Schemes of Arrangement
Creditor Classification
Voting Rights
Corporate Insolvency