Aathar Ah Kong Andrew v CIMB Securities: Voluntary Arrangement & Material Irregularity
The Singapore Court of Appeal heard appeals by Mr. Aathar Ah Kong Andrew against the High Court's decision to revoke the approval of his second voluntary arrangement under Part V of the Bankruptcy Act. CIMB Securities (Singapore) Pte Ltd, Citibank Singapore Limited, OUE Lippo Healthcare Limited, and KGI Securities (Singapore) Pte Ltd were the respondents. The court dismissed Mr. Aathar's appeals, finding material irregularities in the creditors' meeting, particularly concerning the valuation and treatment of certain creditors' claims and the lack of candor regarding the source of funding. The court emphasized the importance of full disclosure by the debtor and the nominee's duty of scrutiny in voluntary arrangements.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeals dismissed.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal revoked approval for Aathar Ah Kong Andrew's second voluntary arrangement due to material irregularities in creditors' meeting.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Aathar Ah Kong Andrew | Appellant, Applicant | Individual | Appeal Dismissed | Lost | Goh Kok Leong, Charlene Sim Yan, John Paul Koh |
| CIMB Securities (Singapore) Pte Ltd | Respondent | Corporation | Appeal Dismissed | Won | Ho Seng Giap, Adly Rizal bin Said |
| Citibank Singapore Limited | Respondent | Corporation | Appeal Dismissed | Won | Wong Yao Fang |
| OUE Lippo Healthcare Limited (Formerly Known as International Healthway Corporation Limited) | Respondent | Corporation | Appeal Dismissed | Won | Chow Chao Wu Jansen, Danitza Hon Cai Xia |
| KGI Securities (Singapore) Pte Ltd (Formerly Known as KGI Fraser Securities Pte Ltd) | Respondent | Corporation | Appeal Dismissed | Won | Goh Siong Pheck Francis, Lim Ke Xiu, Shaun Leong Li Shiong, Toh Wei Qing Geraldine |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Phang Boon Leong | Judge of Appeal | Yes |
| Woo Bih Li | Judge | No |
| Quentin Loh | Judge | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Goh Kok Leong | Ang & Partners |
| Charlene Sim Yan | Ang & Partners |
| John Paul Koh | Ang & Partners |
| Ho Seng Giap | Tito Isaac & Co LLP |
| Adly Rizal bin Said | Tito Isaac & Co LLP |
| Wong Yao Fang | Fabian & Khoo |
| Chow Chao Wu Jansen | Rajah & Tann Singapore LLP |
| Danitza Hon Cai Xia | Rajah & Tann Singapore LLP |
| Goh Siong Pheck Francis | Eversheds Harry Elias LLP |
| Lim Ke Xiu | Eversheds Harry Elias LLP |
| Shaun Leong Li Shiong | Eversheds Harry Elias LLP |
| Toh Wei Qing Geraldine | Eversheds Harry Elias LLP |
4. Facts
- Mr. Aathar proposed a voluntary arrangement to stave off bankruptcy proceedings.
- Mr. Aathar's first voluntary arrangement was revoked due to a lack of candour.
- Mr. Aathar proposed a second voluntary arrangement with funding from PT Cahaya.
- The nominee initially assigned a zero value to some claims, then reconsidered.
- The judge found material irregularities in the second voluntary arrangement.
- The source of Mr. Aathar's funding was deemed opaque and suspect.
- The Indonesian creditors' claims were questioned due to a prior waiver.
5. Formal Citations
- Aathar Ah Kong Andrew v CIMB Securities (Singapore) Pte Ltd, Civil Appeals Nos 60, 61, 62, 63 of 2018 and Summons No 138 of 2018, [2019] SGCA 34
6. Timeline
| Date | Event |
|---|---|
| Commodities market slump and healthcare stock drop. | |
| Shares in IHC purchased from April to September. | |
| Singapore Exchange issued a trading advisory. | |
| Citibank filed a bankruptcy petition against Mr Aathar. | |
| Mr Aathar filed an application proposing his first voluntary arrangement. | |
| Mr Fan adjudged a bankrupt. | |
| Mr Aathar applied for another interim order and filed a second proposal for a voluntary arrangement. | |
| Letter from PT Cahaya Bangun Sarana provided. | |
| Nominee requested Mr Aathar to identify his financial contributor. | |
| First creditors’ meeting convened. | |
| Second creditors’ meeting convened. | |
| Nominee wrote to the creditors, indicating that Mr Aathar’s second proposed voluntary arrangement had passed. | |
| High Court heard an application by the dissenting creditors to revoke the approval for Mr Aathar’s second voluntary arrangement. | |
| Hoo Sheau Peng J’s decision in International Healthway Corp rendered. | |
| Full written grounds for International Healthway Corp issued. | |
| Court of Appeal dismissed Mr Aathar’s appeals. | |
| Date of judgment. |
7. Legal Issues
- Material Irregularity in Voluntary Arrangement
- Outcome: The court found material irregularities in the nominee's handling of creditor claims and the debtor's lack of candor, justifying the revocation of the voluntary arrangement.
- Category: Substantive
- Sub-Issues:
- Failure to properly adjudicate claims
- Lack of candour in statement of affairs
- Opaque source of funding
- Duties of Debtor and Nominee in Voluntary Arrangement
- Outcome: The court emphasized the debtor's duty of full disclosure and the nominee's duty of independence and scrutiny in voluntary arrangements.
- Category: Substantive
- Sub-Issues:
- Duty of full disclosure by debtor
- Duty of independence and scrutiny by nominee
8. Remedies Sought
- Revocation of Approval for Voluntary Arrangement
- Dismissal of Appeal
9. Cause of Actions
- Review of Creditors' Meeting Decision
- Revocation of Approval for Voluntary Arrangement
10. Practice Areas
- Insolvency
- Bankruptcy
- Restructuring
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 revocation of approval for Mr Aathar’s first voluntary arrangement due to lack of candour in his statement of affairs. |
| Re Aathar Ah Kong Andrew | High Court | Yes | [2018] SGHC 124 | Singapore | Cited as the grounds of decision for the High Court's decision to revoke the approval for Mr Aathar's second voluntary arrangement, which is the subject of the present appeals. |
| Re a Debtor (No 2389 of 1989) | English High Court | Yes | [1991] 2 WLR 578 | England and Wales | Cited for the principle that a proposal for a voluntary arrangement is an offer to all creditors as a class. |
| 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 importance of respecting and safeguarding the integrity of the voting outcomes of the scheme creditors’ meeting(s). |
| Andrew Fender v The Commissioners of Inland Revenue | English High Court | Yes | [2003] EWHC 3543 (Ch) | England and Wales | Cited for the principles regarding material irregularities in voluntary arrangements and the objective assessment of their impact on creditors' decisions. |
| International Healthway Corp Ltd v The Enterprise Fund III Ltd and others | High Court | Yes | [2018] SGHC 246 | Singapore | Cited in relation to OUELH's claim against Mr Aathar, but the court found it to be of no assistance to Mr Aathar's argument in these appeals. |
| Re a debtor (No 222 of 1990), ex parte the Bank of Ireland and others | English High Court | Yes | [1992] BCLC 137 | England and Wales | Cited for the presumption that a creditor who has been summoned to a creditors’ meeting has an entitlement to vote. |
| Selim v McGrath | Supreme Court of New South Wales (Equity Division) | Yes | [2003] NSWSC 927 | Australia | Cited for the principle that a nominee must place a 'just' estimated minimum value on a debt for the purpose of entitlement to vote. |
| In re Cranley Mansions Ltd | English High Court | Yes | [1994] 1 WLR 1610 | England and Wales | Cited for the principle that a nominee must place a 'just' estimated minimum value on a debt for the purpose of entitlement to vote. |
| Cadbury Schweppes plc v Somji | English Court of Appeal | Yes | [2001] 1 WLR 615 | England and Wales | Cited in the context of omissions, and as cited in Andrew Fender at [11]. |
| Re a debtor (No 140 IO of 1995) | English High Court | Yes | [1996] 2 BCLC 429 | England and Wales | Cited for the origins of individual voluntary arrangements and the heavy responsibilities placed on insolvency practitioners involved. |
| Official Receiver v Thompson | Northern Ireland Chancery Division (Bankruptcy) | Yes | [2002] NICh 10 | Northern Ireland | Cited for the principle that a nominee cannot decide of his own accord to invalidate an “objected to” vote. |
| Re UDL Holdings Ltd and others | Hong Kong Court of Appeal | Yes | [2000] 4 HKC 778 | Hong Kong | Cited by Mr Goh, but the court distinguished it from the present case. |
| Roberts v Pinnacle Entertainment Ltd | English High Court | Yes | [2003] EWHC 2394 (Ch) | England and Wales | Cited for the principle that the nominee was wrong to have rejected a creditor’s claim on the basis that the creditor’s written notice had not specified an amount. |
13. Applicable Rules
| Rule Name |
|---|
| r 84 of the Rules |
| r 68(2)(b) of the Rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Bankruptcy Act (Cap. 20) | Singapore |
| Bankruptcy Rules (Cap 20, R 1, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Voluntary arrangement
- Material irregularity
- Creditors' meeting
- Nominee
- Statement of affairs
- Full disclosure
- Candour
- Objected to
- Estimated minimum sum
- Litigation claims
- Indonesian creditors
- Golden Cliff
- PT Cahaya
15.2 Keywords
- Insolvency
- Bankruptcy
- Voluntary Arrangement
- Creditors
- Material Irregularity
16. Subjects
- Insolvency
- Bankruptcy
- Voluntary Arrangement
- Creditors' Rights
17. Areas of Law
- Insolvency Law
- Bankruptcy
- Voluntary Arrangement
- Civil Procedure