United Securities Sdn Bhd v United Overseas Bank: Cross-Border Insolvency & Recognition of Foreign Proceedings
The Singapore Court of Appeal heard an appeal by United Securities Sdn Bhd (USSB) and Robert Teo Keng Tuan against the High Court's decision to recognize the Malaysian Winding Up Proceeding as a foreign main proceeding but decline to grant a stay of Singapore proceedings initiated by United Overseas Bank Ltd (UOB). The Singapore proceedings concerned UOB's rights under a loan agreement and deed of debenture with USSB. The Court of Appeal dismissed the appeal, holding that a stay of the Singapore proceedings was not warranted under the Insolvency, Restructuring and Dissolution Act, which incorporates the UNCITRAL Model Law on Cross-Border Insolvency.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Dismissed
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal addresses recognition of Malaysian insolvency proceedings under the UNCITRAL Model Law and stay of proceedings.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| United Securities Sdn Bhd (in receivership and liquidation) | Appellant | Corporation | Appeal Dismissed | Lost | Abraham Vergis, Suresh s/o Damodara, Ong Ziying Clement, Lim Qiu’en, Ning Jie |
| Robert Teo Keng Tuan | Appellant | Individual | Appeal Dismissed | Lost | Abraham Vergis, Suresh s/o Damodara, Ong Ziying Clement, Lim Qiu’en, Ning Jie |
| United Overseas Bank Ltd | Respondent | Corporation | Appeal Dismissed | Won | Lee Eng Beng, Cheong Tian Ci Torsten |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Justice of the Court of Appeal | Yes |
| Steven Chong | Justice of the Court of Appeal | No |
| Chao Hick Tin | Senior Judge | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Abraham Vergis | Providence Law Asia LLC |
| Suresh s/o Damodara | Damodara Ong LLC |
| Ong Ziying Clement | Damodara Ong LLC |
| Lim Qiu’en | Damodara Ong LLC |
| Ning Jie | Damodara Ong LLC |
| Lee Eng Beng | Rajah & Tann Singapore LLP |
| Cheong Tian Ci Torsten | Rajah & Tann Singapore LLP |
4. Facts
- United Securities Sdn Bhd (USSB) is a Malaysian company wound up in 2007.
- Robert Teo Keng Tuan is USSB's liquidator.
- United Overseas Bank Ltd (UOB) is a Singapore bank to which USSB is indebted.
- The debt is purportedly secured by a charge over USSB's shares in City Centre Sdn Bhd (CCSB).
- A loan agreement and deed of debenture were executed in 1982.
- USSB defaulted on the loan in 1983.
- Parallel proceedings were commenced in Malaysia and Singapore concerning the rights and obligations under the loan agreement and debenture.
5. Formal Citations
- United Securities Sdn Bhd (in receivership and liquidation) and another v United Overseas Bank Ltd, Civil Appeal No 10 of 2021, [2021] SGCA 78
6. Timeline
| Date | Event |
|---|---|
| Loan Agreement signed between Overseas Union Bank Ltd and United Securities Sdn Bhd. | |
| Deed of Debenture executed by United Securities Sdn Bhd. | |
| CCSB Shares transferred to OUB Nominees (Malaysia) Sdn Bhd. | |
| United Securities Sdn Bhd defaulted on loan. | |
| Receivers appointed over properties of United Securities Sdn Bhd. | |
| Winding-up order made against City Centre Sdn Bhd in Malaysia. | |
| United Overseas Bank Ltd took over Overseas Union Bank Ltd's interest. | |
| Winding-up order made against United Securities Sdn Bhd in Malaysia. | |
| 16 parcels of land belonging to City Centre Sdn Bhd were sold. | |
| Liquidators of City Centre Sdn Bhd filed an application in the High Court in Malaya. | |
| Malayan High Court held that UOB Nominees was the sole and rightful contributory of CCSB. | |
| Malaysian Court of Appeal set aside the Malayan High Court's decision. | |
| United Securities Sdn Bhd commenced writ action in the High Court in Malaya. | |
| United Overseas Bank Ltd commenced HC/OS 414/2020 in Singapore. | |
| United Overseas Bank Ltd applied for a stay of the Malaysian Writ Action. | |
| United Securities Sdn Bhd filed HC/SUM 2635/2020 in OS 414. | |
| HC/SUM 2635/2020 was dismissed. | |
| High Court in Malaya dismissed UOB's application for a stay of the Malaysian Writ Action. | |
| United Overseas Bank Ltd appealed against this decision to the Malaysian Court of Appeal. | |
| Judge dismissed OS 780 and RA 211. | |
| Malaysian Court of Appeal delivered its decision allowing UOB’s appeal in respect of the appropriate forum. | |
| Appellants applied for leave to appeal to the Federal Court of Malaysia. | |
| Court of Appeal dismissed the appeal. | |
| Judgment Date |
7. Legal Issues
- Recognition of Foreign Insolvency Proceedings
- Outcome: The Court of Appeal upheld the recognition of the Malaysian Winding Up Proceeding as a foreign main proceeding but declined to recognize the Malaysian Writ Action as a foreign proceeding.
- Category: Substantive
- Sub-Issues:
- Requirements for recognition as a foreign main proceeding
- Requirements for recognition as a foreign non-main proceeding
- Definition of 'foreign proceeding'
- Stay of Proceedings
- Outcome: The Court of Appeal declined to grant a stay of the Singapore proceedings under either Article 20 or Article 21 of the UNCITRAL Model Law.
- Category: Procedural
- Sub-Issues:
- Application of Article 20 of the UNCITRAL Model Law
- Application of Article 21 of the UNCITRAL Model Law
- Discretion to grant a stay
8. Remedies Sought
- Declaration of Rights
- Stay of Proceedings
9. Cause of Actions
- Breach of Contract
- Enforcement of Security
10. Practice Areas
- Commercial Litigation
- Insolvency
- Cross-Border Insolvency
11. Industries
- Banking
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Zetta Jet Pte Ltd and others (Asia Aviation Holdings Pte Ltd, intervener) | High Court | Yes | [2019] 4 SLR 1343 | Singapore | Cited for the principle of promoting uniformity in the application of the Singapore Model Law. |
| SCK Serijadi Sdn Bhd v Artison Interior Pte Ltd | Court of Appeal | Yes | [2019] 1 SLR 680 | Singapore | Cited for the principle that secured creditors are readily granted leave to enforce their security, notwithstanding a stay of proceedings. |
| Korea Asset Management Corp v Daewoo Singapore Pte Ltd | High Court | Yes | [2004] 1 SLR(R) 671 | Singapore | Cited for the principle that leave to proceed will readily be given to an applicant who is merely attempting to claim property which prima facie belongs to the applicant. |
| Power Knight Pte Ltd v Natural Fuel Pte Ltd | High Court | Yes | [2010] 3 SLR 82 | Singapore | Cited in relation to the rights of a secured creditor. |
| Kim and Yu v STX Pan Ocean Co Ltd | High Court of New Zealand | Yes | [2014] NZHC 845 | New Zealand | Cited for the principle that the court has discretion under Article 20(2) to allow a person to commence or continue proceedings, notwithstanding the automatic stay. |
| Rubin and another v Eurofinance SA and others | English Court of Appeal | Yes | [2011] 2 WLR 121 | England and Wales | Cited by the appellants for the argument that the Malaysian Writ Action should be recognized under the SG Model Law, but distinguished by the court. |
| Re Betcorp | US Bankruptcy Court | Yes | 400 BR 266 | United States | Cited for the principle that a collective proceeding is one that considers the rights and obligations of all creditors. |
| In Re Gold & Honey, Ltd | US Bankruptcy Court | Yes | 410 BR 357 | United States | Cited for the principle that receivership in consequence of enforcement of security is naturally not collective, even where the receivership covers most of the debtor’s assets. |
| In re ABC Learning Centres Ltd | US Bankruptcy Court | Yes | 445 BR 318 | United States | Cited for the distinction between receivership proceedings concerned only with the secured creditors’ interests and insolvency proceedings falling within the scope of the Model Law. |
| In Re British American Insurance Company Limited | US Bankruptcy Court | Yes | 425 BR 884 | United States | Cited for the principle that for a proceeding to be collective, it must be instituted for the benefit of creditors generally rather than for a single creditor or class of creditors. |
| Rubin and another v Eurofinance SA and others (Picard and others intervening); In re New Cap Reinsurance Corpn Ltd (in liquidation; New Cap Reinsurance Corpn Ltd and another v Grant and others | UK Supreme Court | Yes | [2012] 3 WLR 1019 | United Kingdom | Cited for overturning the English Court of Appeal’s decision in Rubin, although on a different point of law. |
| Williams v Simpsons (No 5) | High Court of New Zealand | Yes | [2010] NZHC 1786 | New Zealand | Cited for the principle that the term ‘collective’ distinguishes a formal insolvency regime (under which the debtor’s assets are realised for the benefit of all creditors) from private proceedings against a debtor, in which a single creditor seeks judgment for its own benefit. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Insolvency, Restructuring and Dissolution Act (Act 40 of 2018) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Cross-border insolvency
- UNCITRAL Model Law
- Foreign main proceeding
- Foreign non-main proceeding
- Stay of proceedings
- Deed of debenture
- Liquidation
- Secured creditor
- Winding up
- Centre of main interests
15.2 Keywords
- Insolvency
- Cross-border
- Singapore
- Malaysia
- UNCITRAL
- Model Law
- Stay of proceedings
- Recognition
- Foreign proceeding
16. Subjects
- Insolvency
- Cross-Border Law
- Civil Procedure
17. Areas of Law
- Insolvency Law
- Cross-border insolvency
- Civil Procedure