Re Design Studio Group Ltd: Super-Priority Financing & Roll-Up under Companies Act
The High Court of Singapore, in *Re Design Studio Group Ltd*, considered applications by Design Studio Group Ltd and its subsidiaries for super-priority status for rescue financing under Section 211E of the Companies Act. The court, presided over by Aedit Abdullah J, granted super-priority to the debt arising from rescue financing to be provided by Hongkong and Shanghai Banking Corporation and Depa United Group PJSC. The court found that the financing met the requirements of Section 211E(9), even though it involved a roll-up of pre-existing debt. The court exercised its discretion in favor of the application, noting the absence of creditor opposition and the potential benefit to creditors compared to liquidation.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Super-priority granted to the debt under Section 211E(1)(b) of the Companies Act.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court allows super-priority for rescue financing involving a roll-up under s 211E of the Companies Act, benefiting creditors.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Design Studio Group Ltd | Applicant | Corporation | Application Granted | Won | Chua Sui Tong, Wong Wan Chee |
| Design Studio Asia Pte Ltd | Applicant | Corporation | Application Granted | Won | Chua Sui Tong, Wong Wan Chee |
| DSG Manufacturing Singapore Pte Ltd | Applicant | Corporation | Application Granted | Won | Chua Sui Tong, Wong Wan Chee |
| DSG Asia Holdings Pte Ltd | Applicant | Corporation | Application Granted | Won | Chua Sui Tong, Wong Wan Chee |
| DSG Projects Singapore Pte Ltd | Applicant | Corporation | Application Granted | Won | Chua Sui Tong, Wong Wan Chee |
| Design Studio (China) Pte Ltd | Applicant | Corporation | Application Granted | Won | Chua Sui Tong, Wong Wan Chee |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Aedit Abdullah | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Chua Sui Tong | Rev Law LLC |
| Wong Wan Chee | Rev Law LLC |
4. Facts
- The applicants sought super-priority for rescue financing under s 211E of the Companies Act.
- The proposed financing was to be provided by DEPA and HSBC to the fifth applicant.
- The lenders were to finance an aggregate sum of S$62.08 million.
- Part of the financing would be used to repay existing debts.
- The DSG Group’s expected average monthly burn rate for April and May 2020 was expected to exceed the amount it possessed in its bank accounts by almost S$800,000.
- The Chief Restructuring Officer of the DSG Group has opined that if HSBC did not provide the proposed financing, the DSG Group would most certainly need to file for liquidation.
- There was a predicted return of only between nil and no more than 3.94 cents to the dollar to unsecured creditors in a liquidation scenario.
5. Formal Citations
- Re Design Studio Group Ltd and other matters, , [2020] SGHC 148
6. Timeline
| Date | Event |
|---|---|
| Luke Furler’s affidavit filed | |
| Term sheet executed by DEPA and HSBC | |
| Luke Furler’s affidavit filed | |
| Luke Furler’s affidavit filed | |
| HSBC’s submissions filed | |
| Fifth applicant’s submissions filed | |
| Certified Minutes dated | |
| Hearing date | |
| Hearing date | |
| Judgment date |
7. Legal Issues
- Whether the proposed financing constitutes rescue financing under Section 211E(9) of the Companies Act
- Outcome: The court found that the proposed financing arrangement constitutes rescue financing.
- Category: Substantive
- Whether the court should exercise its discretion to grant super-priority to the debt arising from the proposed financing
- Outcome: The court exercised its discretion in favor of granting super-priority.
- Category: Procedural
- Related Cases:
- [2018] 3 SLR 898
- Whether the fifth applicant would have been able to obtain rescue financing unless super-priority is given
- Outcome: The court found that the fifth applicant would not have been able to obtain rescue financing unless super-priority was given.
- Category: Substantive
8. Remedies Sought
- Order for super-priority to be given to the debt arising from rescue financing
9. Cause of Actions
- Application for super-priority for rescue financing under Section 211E of the Companies Act
10. Practice Areas
- Commercial Litigation
- Insolvency
- Debt Restructuring
11. Industries
- Construction
- Interior Design
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Attilan Group Ltd | High Court | Yes | [2018] 3 SLR 898 | Singapore | Cited for the principle that Section 211E(9) does not prohibit a rescue financier from stipulating conditions for the grant of rescue finance. |
| In re Lyondell Chemical Company, et al | Bankr, SDNY | Yes | 402 BR 596 | United States | Cited as an example of US courts approving rescue financing loans containing roll-ups. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) Section 211B | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) Section 211E | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) Section 211E(9) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) Section 328 | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) Section 210(1) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Rescue financing
- Super-priority
- Roll-up
- Moratorium
- Scheme of arrangement
- Liquidation
- Companies Act
- Creditors
- Debtors
- Restructuring
15.2 Keywords
- Insolvency
- Rescue Financing
- Super Priority
- Roll-up
- Companies Act
- Singapore
- Restructuring
16. Subjects
- Insolvency
- Rescue Financing
- Corporate Law
17. Areas of Law
- Insolvency Law
- Companies Act
- Super-priority financing
- Rescue Financing