Re Lehman Brothers Finance Asia: Determining Foreign Currency Conversion Date in Creditors’ Voluntary Liquidation
In Re Lehman Brothers Finance Asia Pte Ltd, the Singapore High Court, presided over by Justice Quentin Loh, addressed an application by the Liquidators to determine the relevant date for converting foreign currency debts to Singapore Dollars in a Creditors’ Voluntary Liquidation. The court ruled that the conversion should occur at the exchange rate prevailing on the date of the resolution for voluntary winding up, which was 17 October 2008.
1. Case Overview
1.1 Court
High Court1.2 Outcome
The debts of the Company in foreign currency which are admitted in proof by the Liquidators are, for the purposes of dividends in respect of such debts, to be converted into Singapore Dollars at the exchange rate prevailing as at the Resolution Date, viz, 17 October 2008.
1.3 Case Type
Insolvency
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
The High Court addressed the date for converting foreign currency debts to SGD in Lehman Brothers Finance Asia's liquidation, ruling it should be the resolution date.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Re Lehman Brothers Finance Asia Pte Ltd (in creditors’ voluntary liquidation) | Applicant | Corporation | Application granted | Won | |
| Fullerton (Private) Limited | Respondent | Corporation | Application opposed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Quentin Loh | Judge | Yes |
4. Counsels
4. Facts
- Lehman Brothers Finance Asia Pte Ltd was an investment holding company.
- The company was wholly owned by Lehman Brothers Investments Pte Ltd.
- The Board of Directors decided to place the company into Creditors’ Voluntary Liquidation on 23 September 2008.
- A statutory declaration was lodged with ACRA and the Official Receiver on 23 September 2008.
- The resolution placing the company in Creditors’ Voluntary Liquidation was passed on 17 October 2008.
- The liquidators received claims from unsecured creditors in USD, JPY, AUD and GBP.
- The liquidators realized assets totaling approximately SGD 213,000,000.
5. Formal Citations
- Re Lehman Brothers Finance Asia Pte Ltd (in creditors’ voluntary liquidation), Originating Summons No 149 of 2012, [2012] SGHC 190
6. Timeline
| Date | Event |
|---|---|
| Lehman Brothers Finance Asia Pte Ltd incorporated in Singapore | |
| Board of Directors decided to place the Company into Creditors’ Voluntary Liquidation | |
| Statutory declaration lodged with ACRA and the Official Receiver | |
| Resolution placing the Company in Creditors’ Voluntary Liquidation was passed | |
| Liquidators gave notice to unsecured creditors of intention to declare an interim dividend | |
| Liquidators informed unsecured creditors of the admission or rejection of proofs of debt | |
| Judgment reserved |
7. Legal Issues
- Date for Conversion of Foreign Currency Debts in Liquidation
- Outcome: The court held that the relevant date for conversion is the date of the resolution for voluntary winding up (17 October 2008).
- Category: Substantive
- Related Cases:
- [1956] SCR 90
- [2003] 1 SLR(R) 93
- [1955] 1 All ER 76
- [1995] 2 SLR(R) 746
- [1976] 2 All ER 669
- [1983] Ch 1
- [1990] 1 Qd R 306
- [1994] 3 SLR(R) 504
- [1996] 1 SLR(R) 884
- [1993] 1 Ch 425
8. Remedies Sought
- Determination of the relevant date for conversion of foreign currency debts to Singapore Dollars
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Liquidation
- Corporate Restructuring
11. Industries
- Finance
- Investment
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Attorney General v Creditors of Tenganipah Estate | Court of Appeal of Sarawak, North Borneo and Brunei | Yes | [1956] SCR 90 | Sarawak, North Borneo and Brunei | Cited for establishing a different date for conversion of foreign currency debts from the date for proof of debts in bankruptcy, which the current application challenges. |
| Panorama Development Pte Ltd v Fitzroy Investment Pte Ltd | High Court | Yes | [2003] 1 SLR(R) 93 | Singapore | Cited for identifying the problem of determining the equivalent date of the bankruptcy order in the context of insolvent companies. |
| Mah Kah Yew v Public Prosecutor | High Court | Yes | [1968–1970] SLR(R) 851 | Singapore | Cited for the interpretation of s 88(3) of the Malaysia Act 1963 and s 13 of the Republic of Singapore Independence Act 1965 regarding binding precedents. |
| Re Russian Commercial and Industrial Bank | N/A | Yes | [1955] 1 All ER 76 | England | Cited for the principle that the date for conversion into sterling of a foreign currency debt should be the date when the debt became due. |
| Re City Securities Pte | High Court | Yes | [1995] 2 SLR(R) 746 | Singapore | Applied s 40(3) of the Bankruptcy Act (Cap 20, 1985 Rev Ed) and held that the cut-off date up to which proofs of debt could be calculated was the date of the order and not the date of presentation of the winding up petition. |
| In re Dynamics Corporation of America | N/A | Yes | [1976] 2 All ER 669 | England | Held that the conversion of a US Dollar debt to Sterling was to be based on the exchange rate prevailing at the date of the making of the winding-up order. |
| In re Lines Bros Ltd (In Liquidation) | English Court of Appeal | Yes | [1983] Ch 1 | England | Approved Re Dynamics and concerned a creditors’ voluntary liquidation, holding that foreign currency debts should be converted at the rate of exchange prevailing at the date of the resolution to wind up. |
| Re Gresham Corporation Pty Ltd (in liq.) | N/A | Yes | [1990] 1 Qd R 306 | Australia | Applied Re Dynamics in Australia, holding that the amounts of proofs in foreign currency be converted into Australian dollars at the rate appropriate on the date upon which the company was placed in liquidation. |
| Re Mohamed Yunus Valibhoy, ex parte Bank of Credit and Commerce Hong Kong Ltd | Singapore High Court | Yes | [1994] 3 SLR(R) 504 | Singapore | Approved Re Lines Bros in the context of the 1985 BA, holding that payment to the bank should be made on the proof in the Singapore dollar equivalent of the US dollar at the exchange rate prevailing on the date the adjudication and receiving orders were made. |
| Good Property Land Development Pte Ltd (in liquidation) v Societe-Generale | Court of Appeal | Yes | [1996] 1 SLR(R) 884 | Singapore | Cited for holding that insolvency set-off occurs at the date of commencement of the compulsory winding up of a company as opposed to the date of the winding up order. |
| MS Fashion Ltd & Ors v Bank of Credit and Commerce International SA (in liq) & Ors (No.2) | N/A | Yes | [1993] 1 Ch 425 | England | Cited for holding that in the context of a winding up, the relevant date for assessing the mutuality of credits and debts in insolvency set-off is the date of the winding up order. |
| Arab Banking Corp v United Overseas Bank Ltd | Court of Appeal | Yes | [1991] 1 SLR(R) 560 | Singapore | Cited in Panorama Development Pte Ltd v Fitzroy Investment Pte Ltd [2003] 1 SLR(R) 93, regarding reservations on the Court of Appeal’s reliance on this case. |
13. Applicable Rules
| Rule Name |
|---|
| Bankruptcy Rules (Cap 20, Rg 1, 2006 Rev Ed) |
| Companies (Winding Up) Rules (Cap 50, Rg 1, 2006 Rev Ed) |
| English Insolvency Rules 1986 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) | Singapore |
| Malaysia Act 1963 (Act 26 of 1963) (Malaya) | Malaysia |
| Republic of Singapore Independence Act 1965 (1985 Rev Ed) | Singapore |
| English Insolvency Act 1986 | England |
15. Key Terms and Keywords
15.1 Key Terms
- Creditors’ Voluntary Liquidation
- Foreign Currency Conversion
- Statutory Declaration
- Resolution Date
- Commencement Date
- Bankruptcy Order
- Winding Up Order
- Liquidators
- Provable Debts
- Insolvency Set-off
15.2 Keywords
- liquidation
- insolvency
- foreign currency
- conversion date
- Lehman Brothers
- Singapore
- creditors
- voluntary winding up
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Winding Up | 90 |
| Bankruptcy | 70 |
| Insolvency Law | 70 |
| Company Law | 60 |
| Commercial Law | 30 |
16. Subjects
- Insolvency
- Liquidation
- Foreign Currency Conversion
- Company Law