Re Swiber Holdings Ltd: Trustee's Voting Rights & Expenses in Judicial Management

In Re Swiber Holdings Ltd, the Singapore High Court addressed an application by British and Malayan Trustees Ltd (BMT), the trustee of notes issued by Swiber Holdings Ltd, which is under judicial management, for directions on voting rights in creditors' meetings and the treatment of BMT's expenses. The court held that BMT is the sole creditor entitled to vote in meetings under ss 227M–227N of the Companies Act, and clarified how BMT should exercise its vote. The court declined to order that BMT's expenses be charged on Swiber's property in priority to other debts. The court made no order as to costs.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Directions and orders given regarding voting rights and expenses; no order as to costs.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court clarifies the trustee's voting rights in creditors' meetings and the treatment of trustee's expenses during the judicial management of Swiber Holdings Ltd.

1.7 Decision Date

30 September 2018

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
British and Malayan Trustees Ltd	Applicant	Corporation	Directions and orders given regarding voting rights	Partial	Suresh Sukumaran Nair of Nair & Co LLC Nicole Foo of Nair & Co LLC
United Overseas Bank Ltd	Other	Corporation	No specific outcome	Neutral	Wong Pei Ting of Allen & Gledhill LLP
Swiber Holdings Ltd	Applicant	Corporation	Subject to judicial management	Neutral
ICBC	Other	Corporation	No specific outcome	Neutral	Mabel Tan of Virtus Law LLP

3. Judges

Judge Name	Title	Delivered Judgment
Kannan Ramesh	Judge	Yes

4. Counsels

Counsel Name	Organization
Suresh Sukumaran Nair	Nair & Co LLC
Nicole Foo	Nair & Co LLC
Wong Pei Ting	Allen & Gledhill LLP
Mabel Tan	Virtus Law LLP

4. Facts

British and Malayan Trustees Ltd (BMT) was appointed trustee of notes issued by Swiber Holdings Ltd.
Swiber Holdings Ltd was placed under judicial management.
BMT sought directions on voting rights in creditors' meetings and the treatment of its expenses.
The trust deed defined 'Noteholders' by reference to the Terms and Conditions of the Notes.
The trust deed vested BMT with the right to institute proceedings against Swiber to enforce Swiber’s obligations pertaining to the Notes.
The Judicial Managers notified BMT that it was disclaiming any personal liability under the Deed and related agreements between Swiber and BMT.

5. Formal Citations

Re Swiber Holdings Ltd, Originating Summons No 767 of 2016(Summons No 4055 of 2017), [2018] SGHC 211

6. Timeline

Date	Event
2007-07-20	Trust deed dated
2010-07-22	Trust deed amended
2012-12-21	Trust deed amended and restated
2016-07-29	Swiber applied to be placed under judicial management
2016-09-16	Swiber announced it would default on coupon payment for Series 17 Notes
2016-10-06	Court ordered Swiber to be placed under judicial management
2016-10-06	Swiber announced it would default on coupon payment for Series 15 Notes
2016-10-12	Swiber announced it would default on coupon payment for Series 14 Notes
2016-10-13	BMT's solicitors wrote to Swiber's solicitors regarding potential events of default
2016-11-02	Swiber's solicitors informed BMT that Swiber was not in a position to indemnify and/or remunerate BMT
2017-01-11	Judicial Managers announced an informal creditors' meeting
2017-01-25	Informal creditors' meeting held
2017-06-13	BMT filed a proof of debt as trustee of the Notes
2017-09-05	BMT filed Summons No 4055 of 2017
2017-11-27	Hearing on Summons No 4055 of 2017
2017-12-01	Directions given by the court
2018-10-01	Grounds of decision delivered

7. Legal Issues

Voting Rights in Creditors' Meetings
- Outcome: The court clarified the voting rights of the trustee and noteholders in meetings under ss 227M-227N and s 227X read with s 210 of the Companies Act.
- Category: Procedural
- Sub-Issues:
  - Headcount Test
  - Vote on value
  - Vote on number
- Related Cases:
  - [2012] 2 SLR 189
  - [1895] 1 Ch 267
  - [2009] EWHC 3919 (Ch)
  - [2013] EWHC 4072 (Ch)
  - [2017] NSWSC 567
  - [2018] SGHC 180
  - [2009] 3 HKC 292
Treatment of Trustee's Expenses
- Outcome: The court declined to order that the trustee's expenses be charged on Swiber's property in priority to other debts.
- Category: Substantive
- Related Cases:
  - [2006] 1 WLR 2863
  - [2003] 2 SLR(R) 571
  - [1992] Ch 505

8. Remedies Sought

Directions on voting rights
Order for BMT's costs to be treated as debts incurred by the Judicial Managers
Order for the Judicial Managers to provide BMT with information
Order for costs of the application to be paid out of Swiber's assets

9. Cause of Actions

No cause of actions

10. Practice Areas

Judicial Management
Schemes of Arrangement

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
SAAG Oilfield Engineering (S) Pte Ltd (formerly known as Derrick Services Singapore Pte Ltd) v Shaik Abu Bakar bin Abdul Sukol and another and another appeal	Court of Appeal	Yes	[2012] 2 SLR 189	Singapore	Endorsed the definition of 'creditor' for scheme of arrangement purposes, including contingent creditors.
In re Midland Coal, Coke, and Iron Company	N/A	Yes	[1895] 1 Ch 267	England	Laid down the definition of 'creditor' as any person with a pecuniary claim against the company, including contingent creditors.
In re Dunderland Iron Ore Co Ltd	N/A	Yes	[1909] 1 Ch 446	England	Beneficial holder of notes constituted by a trust deed did not amount to a creditor of the issuer.
In re Uruguay Central and Hygueritas Railway Company of Monte Video	N/A	Yes	[1879] 11 Ch D 372	England	Beneficial holder was not a creditor of the issuer.
In the Matter of Castle Holdco 4 Ltd	High Court	Yes	[2009] EWHC 3919 (Ch)	England	Held that ultimate beneficial owners of notes were entitled to vote in creditors' meetings as contingent creditors.
In the matter of Gallery Capital SA	High Court	Yes	N/A	United Kingdom	Applied the Contingent Creditor Analysis, holding that ultimate beneficial owners of notes held through global custodian arrangements were entitled to vote in meetings to consider a proposed scheme.
In the Matter of The Co-operative Bank plc	High Court	Yes	[2013] EWHC 4072 (Ch)	England	Held that parties holding the beneficial interest in the notes were entitled to vote in meetings to approve the scheme, in place of the trustees.
In the matter of Boart Longyear Ltd	Supreme Court of New South Wales	Yes	[2017] NSWSC 567	Australia	Applied the Contingent Creditor Analysis, holding that the ultimate beneficial owners were creditors entitled to vote for the purposes of the scheme.
Re Swiber Holdings Ltd and another matter	High Court	Yes	[2018] SGHC 180	Singapore	Held that reg 74 of the Companies Regulations does not apply to meetings held under s 227X read with s 210 of the Act.
Re Equitable Life Assurance Society	High Court	Yes	N/A	United Kingdom	Endorsed the Split Vote Approach where a voting party represented beneficial owners with conflicting wishes.
Re PCCW Ltd	Court of Appeal	Yes	[2009] 3 HKC 292	Hong Kong	Endorsed the Split Vote Approach for the purposes of a Headcount Test.
In the Matter of Little Sheep Group Ltd	Grand Court	Yes	N/A	Cayman Islands	Rejected the One Vote Approach and adopted the Multiple Votes Approach.
In re Dee Valley Group plc	N/A	Yes	[2018] Ch 55	England	The chairman of a shareholders’ meeting convened to vote on a proposed scheme disallowed the votes of certain shareholders opposed to the scheme because the evidence showed that the relevant shareholders had taken part in a share-splitting exercise to defeat the scheme.
SK Engineering & Construction Co Ltd v Conchubar Aromatics Ltd and another appeal	Court of Appeal	Yes	[2017] 2 SLR 898	Singapore	Discussed vote-splitting and observed that it would engage the issue of whether those who attended the meeting were fairly representative of the class of creditors or the class of members.
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	The general concern with vote-splitting in respect of shareholders’ schemes of arrangement would not be any different in relation to creditors’ schemes of arrangement.
In the Matter of Alibaba.com Ltd	Grand Court	Yes	N/A	Cayman Islands	Expressed doubts about the Multiple Votes Approach.
In the Matter of Uni-Asia Holdings Ltd	Grand Court	Yes	N/A	Cayman Islands	Applied the Multiple Votes Approach.
In the Matter of a Representation by Computer Patent Annuities Holdings Ltd	Royal Court	Yes	[2010] JRC 11	Jersey	Adopted the Fractional Votes Approach.
Centre Reinsurance International Co and others v Freakley and others	House of Lords	Yes	[2006] 1 WLR 2863	England	Interpreted provisions equivalent to s 227J(3) under English law.
Chee Kheong Mah Chaly and others v Liquidators of Baring Futures (Singapore) Pte Ltd	Court of Appeal	Yes	[2003] 2 SLR(R) 571	Singapore	Observed that the liquidation expenses principle relates to post-liquidation liabilities incurred by a liquidator for the purposes of the winding-up.
In re Atlantic Computer Systems Plc	N/A	Yes	[1992] Ch 505	England	Held that the liquidation expenses principle was applicable to administrations under the English administration procedure.
Re PCChip Computer Manufacturer (S) Pte Ltd (in compulsory liquidation)	N/A	Yes	N/A	Singapore	Leading local case on the principle in ex parte James.
In re Clark (A Bankrupt), Ex parte The Trustee v Texaco Ltd	N/A	Yes	N/A	England	Held that the principle in ex parte James would apply if the following four conditions were satisfied.
Re NRMA Ltd No 5131 of 1999	N/A	Yes	N/A	Australia	Laid down principles for costs orders in applications for the convening of meetings to approve a scheme and for the approval of proposed schemes.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap. 50) Section 227B(1)	Singapore
Companies Act (Cap 50, 2006 Rev Ed) Section 227X	Singapore
Companies Act (Cap 50, 2006 Rev Ed) Section 210	Singapore
Companies Act (Cap 50) Section 227N(2)	Singapore
Companies Act (Cap 50) Section 227M	Singapore
Companies Act (Cap 50) Section 227I(2)	Singapore
Companies Act Section 227D(4)	Singapore
Companies Act Section 227J(3)	Singapore
Trust Companies Act (Cap 336, 2006 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Judicial management
Trustee
Noteholders
Creditors' meetings
Voting rights
Expenses
Trust deed
Global custodian arrangement
Headcount Test
Contingent creditor
Split Vote Approach
Multiple Votes Approach

15.2 Keywords

Judicial management
Trustee
Voting rights
Creditors
Expenses

17. Areas of Law

Area Name	Relevance Score
Judicial Management	90
Insolvency Law	80
Company Law	75
Bankruptcy	60
Winding Up	50
Trust Law	40
Banking and Finance	30
Debt Issuance	25

16. Subjects

Insolvency
Judicial Management
Companies Law
Trust Law