Re Aathar Ah Kong Andrew: Setting Aside Approval for Voluntary Arrangement Due to Material Irregularities
The Singapore High Court heard applications from CIMB Securities (Singapore) Pte Ltd, Citibank Singapore Limited, KGI Securities (Singapore) Pte Ltd, and OUE Lippo Heathcare Limited to set aside the approval for Mr. Aathar Ah Kong Andrew's voluntary arrangement. The court, presided over by Valerie Thean J, revoked the approval due to material irregularities in the conduct of the creditors’ meeting and Mr. Aathar’s lack of disclosure. The court found issues with the nominee's handling of litigation claims, the veracity of Indonesian creditors' claims, an error in admitting a claim by Golden Cliff, and Mr. Aathar's failure to disclose the source of funds for the proposal.
1. Case Overview
1.1 Court
High Court of Singapore1.2 Outcome
Approval for the voluntary arrangement was revoked, and the court directed that no further creditors’ meeting be held.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court revokes approval for Mr. Aathar's voluntary arrangement due to material irregularities, including nominee's decisions and lack of disclosure.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Aathar Ah Kong Andrew | Applicant | Individual | Approval for voluntary arrangement revoked | Lost | |
| CIMB Securities (Singapore) Pte Ltd | Respondent | Corporation | Application granted | Won | |
| Citibank Singapore Limited | Respondent | Corporation | Application granted | Won | |
| KGI Securities (Singapore) Pte Ltd | Respondent | Corporation | Application granted | Won | |
| OUE Lippo Heathcare Limited | Respondent | Corporation | Application granted | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Valerie Thean | Judge | Yes |
4. Counsels
4. Facts
- Citibank filed a bankruptcy petition against Mr. Aathar on 2 February 2016.
- Mr. Aathar proposed a voluntary arrangement to stave off bankruptcy.
- The creditors' meeting approved Mr. Aathar's voluntary arrangement.
- Four disgruntled creditors applied to set aside the approval.
- The nominee did not assign any value to the Litigation Claims for voting purposes.
- The bulk of the claims against Mr. Aathar comprised claims by 24 Indonesian creditors.
- Mr. Aathar failed to disclose his source of funds for the proposal as required by Rule 68 of the Bankruptcy Rules.
5. Formal Citations
- Re Aathar Ah Kong Andrew, , [2018] SGHC 124
6. Timeline
| Date | Event |
|---|---|
| Citibank filed a bankruptcy petition against Mr. Aathar. | |
| Mr. Aathar filed an application for an interim order and a proposal for a voluntary arrangement. | |
| A creditors’ meeting was held. | |
| A creditors’ meeting was held. | |
| The Assistant Registrar granted applications to set aside the approval of the voluntary arrangement. | |
| The appeal against the AR’s decision was withdrawn. | |
| Mr. Aathar applied for another interim order on the basis of a fresh proposal. | |
| Mr. Aathar obtained an interim order in relation to his new proposal. | |
| The nominee notified the creditors of Mr. Aathar’s proposal. | |
| The nominee notified the creditors of Mr. Aathar’s proposal. | |
| The first creditors’ meeting was held. | |
| The nominee provided the creditors present with his adjudication of the debts. | |
| The nominee set out the results of the creditors’ vote via email. | |
| The nominee wrote to creditors, stating that Mr. Aathar’s proposal had met the threshold for approval. | |
| The court granted the order revoking the approval given for the voluntary agreement. | |
| Grounds of decision furnished. |
7. Legal Issues
- Material Irregularity in Creditors' Meeting
- Outcome: The court found material irregularities in the conduct of the creditors' meeting, arising from the nominee's decisions and Mr. Aathar's lack of disclosure, and set aside the approval for the voluntary arrangement.
- Category: Procedural
- Sub-Issues:
- Improper valuation of Litigation Claims
- Doubtful veracity of Indonesian creditors' claims
- Material error in admitting Golden Cliff's claim
- Failure to disclose source of funds
- Related Cases:
- [2017] SGHCR 4
- [2003] EWHC 3543 (Ch)
- [2003] 3 SLR(R) 629
- [1996] 2 BCLC 429
- [2012] 2 SLR 213
- [1996] 1 All ER 37
- [1992] BCLC 137
- [2002] NICh 10
8. Remedies Sought
- Revocation of approval for the voluntary arrangement
- Declaration that OUELH was not bound by the voluntary arrangement
9. Cause of Actions
- Application to revoke approval of voluntary arrangement under Section 54 of the Bankruptcy Act
10. Practice Areas
- Insolvency
- Bankruptcy
- Voluntary Arrangement
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Aathar Ah Kong Andrew | High Court | Yes | [2017] SGHCR 4 | Singapore | Cited for the Assistant Registrar's findings that Mr. Aathar had not been completely forthright and that the nominee had failed to scrutinise Mr. Aathar’s proposal adequately. |
| Andrew Fender v The Commissioners of Inland Revenue | High Court | Yes | [2003] EWHC 3543 (Ch) | England and Wales | Cited for the guiding principles regarding voluntary arrangements, including the debtor's duty of full disclosure and the nominee's duty to exercise independent judgment. |
| Wah Yuen Electrical Engineering Pte Ltd v Singapore Cables Manufacturers Pte Ltd | Court of Appeal | Yes | [2003] 3 SLR(R) 629 | Singapore | Cited for the principle that creditors should be put in possession of such information as is necessary to make a meaningful choice in the context of a scheme of arrangement. |
| Re a Debtor (No 140 of 1995) | High Court | Yes | [1996] 2 BCLC 429 | England and Wales | Cited for elaborating on the duties of the nominee, including the need for independent scrutiny of the debtor's proposal. |
| The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appeal | Court of Appeal | Yes | [2012] 2 SLR 213 | Singapore | Cited for the principle that a scheme manager chairing a creditors’ meeting cannot act capriciously or arbitrarily and must determine issues objectively and transparently. |
| Re Cancol Ltd | High Court | Yes | [1996] 1 All ER 37 | England and Wales | Cited for the position that voluntary arrangements may include and bind creditors of unliquidated debts. |
| Re a debtor (No 222 of 1990), ex parte the Bank of Ireland and others | High Court | Yes | [1992] BCLC 137 | England and Wales | Cited for the principle that for unliquidated claims, a chairman was not expected to make protracted investigation and should simply mark the debt as ‘Doubted’, and otherwise admit it. |
| Official Receiver v Thompson | High Court of Northern Ireland | Yes | [2002] NICh 10 | Northern Ireland | Cited for the principle that if the chairman is in doubt about the creditor he should allow the creditor to vote and mark the vote as objected to. |
13. Applicable Rules
| Rule Name |
|---|
| Bankruptcy Rules (Cap 20, R 1, 2006 Rev Ed) |
| Rule 84(1) of the Bankruptcy Rules |
| Rule 84(2) of the Bankruptcy Rules |
| Rule 84(3) of the Bankruptcy Rules |
| Rule 84(6) of the Bankruptcy Rules |
| Rule 84(4)-(7) of the Bankruptcy Rules |
| Rules 68(2)(b) of the Bankruptcy Rules |
| Rules 68(2)(g) and (h) of the Bankruptcy Rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Bankruptcy Act (Cap 20) | Singapore |
| Section 54 of the Bankruptcy Act | Singapore |
| Section 45(1) of the Bankruptcy Act | Singapore |
| Section 56 of the Bankruptcy Act | Singapore |
| Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
| Section 108 of the Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Voluntary arrangement
- Material irregularity
- Creditors' meeting
- Nominee
- Litigation Claims
- Indonesian creditors
- Golden Cliff
- Source of funds
- Bankruptcy Act
- Bankruptcy Rules
15.2 Keywords
- Voluntary arrangement
- Bankruptcy
- Material irregularity
- Creditors
- Singapore
- Insolvency
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Bankruptcy | 90 |
| Insolvency Law | 90 |
| Voluntary Arrangement | 85 |
16. Subjects
- Insolvency
- Bankruptcy
- Voluntary Arrangements
- Civil Procedure