Re Attilan Group Ltd: Scheme of Arrangement, Rescue Financing & Super Priority
Attilan Group Limited applied to the High Court of Singapore for leave to convene a meeting of creditors to consider a proposed scheme of arrangement under Section 210(1) of the Companies Act and for super priority to be granted in respect of rescue financing under Section 211E of the Companies Act. Phillip Asia Pacific Opportunity Fund Ltd, a creditor, objected to the application. The High Court granted leave to convene the creditors' meeting but declined to grant super priority status to the proposed financing.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Leave granted under Section 210(1) for the Applicant to convene the creditors’ meeting to consider the Scheme as proposed. Application to grant super priority status to the proposed financing from the Subscriber under Section 211E is declined.
1.3 Case Type
Insolvency
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court considers Attilan Group's application for a scheme of arrangement and super priority for rescue financing under Companies Act.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Attilan Group Limited | Applicant | Corporation | Leave granted to convene creditors' meeting, Application for super priority declined | Partial, Lost | Lawrence Lee Mun Kong |
| Phillip Asia Pacific Opportunity Fund Ltd | Respondent | Corporation | Objection to super priority upheld, Objection to creditors' meeting overruled | Won, Lost | Leong Kah Wah, Lim Ruo Lin |
| Six individual creditors | Respondent | Individual | Creditors' meeting allowed, Super priority application declined | Neutral, Neutral | Tee Su Mien |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Aedit Abdullah | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Lawrence Lee Mun Kong | Aptus Law Corporation |
| Leong Kah Wah | Rajah & Tann Singapore LLP |
| Lim Ruo Lin | Rajah & Tann Singapore LLP |
| Tee Su Mien | Rajah & Tann Singapore LLP |
4. Facts
- Attilan Group Limited sought leave to convene a creditors' meeting for a scheme of arrangement.
- Attilan Group Limited also sought super priority for rescue financing from a subscriber.
- Phillip Asia Pacific Opportunity Fund Ltd, a creditor, objected to the application.
- The Applicant issued two circulars to its shareholders.
- Phillip Asia is a creditor because the Applicant provided a guarantee to Phillip Asia for the benefit of Turf Group Holdings Limited.
- The Subscriber has refused to subscribe further under the Subscription Agreement.
- The Applicant sought a scheme of arrangement to restructure its financial affairs and remain a going concern.
5. Formal Citations
- Re: Attilan Group Ltd, Originating Summons No 783 of 2017, [2017] SGHC 283
6. Timeline
| Date | Event |
|---|---|
| Guarantee dated 24 April 2014 provided to Phillip Asia for the benefit of Turf Group Holdings Limited. | |
| Applicant’s shareholders approved the resolutions under both circulars. | |
| Phillip Asia issued a letter of demand against the Applicant. | |
| Phillip Asia instituted a suit in the High Court against the Applicant. | |
| Subscriber's letter to the Applicant. | |
| Lim Chih Li @ Lin ZhiLi’s 1st Affidavit filed. | |
| Shu Kwan Chyuan’s 1st Affidavit filed. | |
| Hearing date. | |
| Applicant offered Phillip Asia the same terms of super priority in return for future financing. | |
| Lim Chih Li @ Lin ZhiLi’s 3rd Affidavit filed. | |
| Hearing before the judge. | |
| Letter from Rajah & Tann to Court. | |
| Applicant and Phillip Asia filed and exchanged further submissions. | |
| Judgment reserved. |
7. Legal Issues
- Scheme of Arrangement
- Outcome: Leave granted to convene a meeting of creditors to consider the proposed scheme.
- Category: Substantive
- Sub-Issues:
- Classification of creditors
- Disclosure of material information
- Realistic prospect of approval
- Rescue Financing
- Outcome: Application for super priority status declined.
- Category: Substantive
- Sub-Issues:
- Super priority
- Reasonable efforts to obtain financing
- Conditions for granting super priority
8. Remedies Sought
- Leave to convene a creditors' meeting
- Super priority for rescue financing
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Commercial Litigation
- Insolvency
- Restructuring
11. Industries
- Media
- Education
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| SK Engineering & Construction Co Ltd v Conchubar Aromatic Ltd and another appeal | Court of Appeal | Yes | [2017] SGCA 51 | Singapore | Cited for the principle that a scheme of arrangement should involve a 'meaningful compromise' and for guidance on discounting related creditors’ votes. |
| Re Punj Lloyd Pte Ltd and another matter | High Court | Yes | [2015] SGHC 321 | Singapore | Cited for the principle that the court’s concern is to ensure that the classes of creditors at the proposed meeting are fairly constituted, that there is sufficient disclosure, that the proposed scheme is not doomed to fail, and that there is no abuse of process. |
| The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appeal | Singapore Court of Appeal | Yes | [2012] 2 SLR 213 | Singapore | Cited for the proposition that the court should apply the dissimilarity principle to determine the proper classification of its creditors and for guidance on the process under Section 210 of the Companies Act. |
| Pacific Rim Investments Pte Ltd v Lam Seng Tiong and another | High Court | Yes | [1995] 2 SLR(R) 643 | Singapore | Cited for the principle that no equitable set-off is possible between two debts since the transactions are not related or connected with each other. |
| Re Ng Huat Foundations Pte Ltd | High Court | Yes | [2005] SGHC 112 | Singapore | Cited with approval for the principle that the court will consider if there is “no realistic prospect” of the scheme receiving the requisite approval. |
| Pacific Andes Resources Development Ltd and other matters | High Court | Yes | [2016] SGHC 210 | Singapore | Cited for the requirements for the granting of a moratorium. |
| Indah Kiat International Finance Company B.V. | English High Court | Yes | [2016] EWHC 246 (Ch) | England and Wales | Could be read as stipulating that there be some examination of the scheme’s explanatory statement even at the calling of meeting stage. |
| In re Johnson Rubber Company, Inc et al | Bankr, ND Ohio | Yes | Case No 07-19391 (Bankr, ND Ohio, 2008) | United States | Interpreting § 364(b) of the Bankruptcy Code 11 USC (US) and for the proposition that “reasonable efforts” must be shown to have been expended in obtaining “financing on an unsecured basis”. |
| In re Western Pacific Airlines, Inc | Bankr, D Colo | Yes | 223 BR 567 (Bankr, D Colo, 1997) | United States | Interpreting § 364(c) of Chapter 11, that the proposed financing has to be in the exercise of sound and reasonable business judgment; no alternative financing is available on any other basis; such financing is in the best interest of the creditors; and no better offers, bids, or timely proposals are before the court. |
| In re Ames Department Stores, Inc | Bankr, SD New York | Yes | 115 BR 34 (Bankr, SD New York, 1990) | United States | Cited for the principle that the decision to grant super priority status is in the full discretion of the courts. |
| In re Mid-State Raceway, Inc and others | Bankr, ND New York | Yes | 323 BR 40 (Bankr, ND New York, 2005) | United States | Cited for the factors considered as relevant in US case law. |
| In re The Crouse Group, Inc | Bankr, ED Pennsylvania | Yes | 71 BR 544 (Bankr, ED Pennsylvania, 1987) | United States | Cited for the principle that the debtor must demonstrate that he “has reasonably attempted, but failed” to seek credit from other available sources. |
| In re Reading Tube Industries | Bankr, ED Pennsylvania | Yes | 72 BR 329 (Bankr, ED Pennsylvania, 1978 | United States | Cited for the principle that the court must make a determination as to how “extensive the debtor’s efforts to obtain credit must be” on a case-by-case basis. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 210 of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 211E of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Scheme of arrangement
- Rescue financing
- Super priority
- Creditors' meeting
- Subscription agreement
- Convertible notes
- Put option holders
- Contingent debt
15.2 Keywords
- scheme of arrangement
- rescue financing
- super priority
- companies act
- insolvency
- creditors
16. Subjects
- Insolvency
- Corporate Law
- Restructuring
17. Areas of Law
- Insolvency Law
- Companies Law
- Schemes of Arrangement
- Rescue Financing