DSG Asia Holdings Pte Ltd: Pre-Packaged Scheme Approval under IRDA Section 71

The Singapore High Court dismissed an application by DSG Asia Holdings Pte Ltd for approval of a pre-packaged scheme of arrangement under Section 71 of the Insolvency, Restructuring and Dissolution Act 2018. Oversea-Chinese Banking Corp Ltd (OCBC) opposed the application. The court, presided over by Aedit Abdullah J, found that the applicant failed to provide adequate disclosure regarding the purchase price in a debt sale to Allington Advisory Pte Ltd, and improperly classified Allington with other unsecured creditors. The court held that Allington's rights as a potential investor rendered its interests dissimilar to those of other unsecured creditors, thus the statutory majority requirements were not met.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Application Dismissed

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court dismisses DSG Asia Holdings' application for pre-packaged scheme approval due to inadequate disclosure and improper creditor classification.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Oversea-Chinese Banking Corp LtdRespondentCorporationOpposition SuccessfulWon
DSG Asia Holdings Pte LtdApplicantCorporationApplication DismissedLost
CSM Works Pte LtdRespondentCorporationOpposition SuccessfulWon
Yong Yuan Construction Pte LtdRespondentCorporationOpposition SuccessfulWon
East Tech Glass Services & Construction Pte LtdRespondentCorporationOpposition SuccessfulWon
Jurong Contractor Pte LtdRespondentCorporationOpposition SuccessfulWon
Hongkong & Shanghai Banking Corp LtdOtherCorporationNeutralNeutral
Edgar RamaniOtherIndividualNeutralNeutral
MQ Communications Pte LtdOtherCorporationNeutralNeutral

3. Judges

Judge NameTitleDelivered Judgment
Aedit AbdullahJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Sim Kwan KiatRajah & Tann Singapore LLP
Celine KeeRajah & Tann Singapore LLP
Chua Sui TongRev Law LLC
Gan Jhia HueiRev Law LLC
Troy DoyleGibson Dunn & Crutcher LLP
Anthony WijayaGibson Dunn & Crutcher LLP
Yeo YangVeritas Law Corp
Ng HweelonVeritas Law Corp
Lynn Wang QiuruVeritas Law Corp
Smitha MenonWongPartnership LLP
Lorraine KohWongPartnership LLP
Sancia NgTito Isaac & Co LLP
Kenneth LimHelmsman LLC

4. Facts

  1. DSG Group sought to implement schemes of arrangement with creditors.
  2. DSG Group initially used the procedure under s 210 of the Companies Act.
  3. DSG Group switched to the pre-packaged scheme procedure under s 71 of the IRDA.
  4. OCBC was a creditor of DSGL, DSGM and DSGP.
  5. The scheme chairman rejected most of OCBC’s claims.
  6. An independent assessor was appointed to adjudicate the claims.
  7. The independent assessor admitted the majority of OCBC’s claims against DSGL and DSGP.
  8. Applicant executed a deed poll to become a primary co-obligor.
  9. Applicant began vote solicitation for the New Scheme.
  10. The DSG Group informed OCBC that related creditors’ claims had been assigned to Allington.
  11. The Applicant entered into a binding term sheet with Allington.
  12. Allington agreed to invest and acquire a majority stake in DSGL.
  13. Allington agreed to provide an emergency working capital facility to several companies in the DSG Group.
  14. The Applicant sought the court’s approval of the New Scheme under s 71 of the IRDA.
  15. OCBC and three other creditors opposed the application.

5. Formal Citations

  1. Re DSG Asia Holdings Pte Ltd, Originating Summons No 429 of 2021, [2021] SGHC 209

6. Timeline

DateEvent
Insolvency, Restructuring and Dissolution Act 2018 enacted
DSG Group promoted Original Schemes to creditors
Scheme chairman adjudicated OCBC’s proofs of debt
Original Singapore Scheme Meetings convened
Independent assessor issued decisions on claims of OCBC
OCBC notified that Applicant executed Deed Poll
Applicant began vote solicitation for New Scheme
DSG Group informed OCBC of Debt Sale to Allington
Scheme manager accepted ballot forms until late April 2021
Hearing commenced
Applicant entered into binding Term Sheet with Allington
Applicant filed originating summons
Hearing
Hearing
Application Dismissed

7. Legal Issues

  1. Adequacy of Disclosure
    • Outcome: The court found that the applicant failed to provide adequate disclosure, specifically regarding the purchase price of the debt sale to Allington.
    • Category: Substantive
    • Sub-Issues:
      • Failure to disclose purchase price of debt sale
      • Inadequate disclosure of financial condition
    • Related Cases:
      • [2012] 4 SLR 1182
      • [2020] Bus LR 2371
      • [2020] EWHC 2376 (Ch)
  2. Classification of Creditors
    • Outcome: The court held that Allington should have been placed in a separate class due to its unique interests as a potential investor, rendering the statutory majority requirements unmet.
    • Category: Substantive
    • Sub-Issues:
      • Improper classification of Allington with other unsecured creditors
      • Allington's unique role as assignee, secured creditor, and potential investor
    • Related Cases:
      • [2012] 2 SLR 213
      • (2001) 4 HKCFAR 358
      • [2003] 3 SLR(R) 629
      • [2020] EWHC 2441 (Ch)

8. Remedies Sought

  1. Court Approval of Scheme of Arrangement

9. Cause of Actions

  • Scheme of Arrangement

10. Practice Areas

  • Debt Restructuring
  • Insolvency
  • Corporate Law

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Tan Cheng Bock v Attorney-GeneralSingapore Court of AppealYes[2017] 2 SLR 850SingaporeCited for the principle of interpreting a provision in the statute.
The Oriental Insurance Co Ltd v Reliance National Asia Re Pte LtdSingapore Court of AppealYes[2008] 3 SLR(R) 121SingaporeCited to show that Singapore adapted the scheme of arrangement from the English and Australian companies legislations.
The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appealSingapore Court of AppealYes[2012] 4 SLR 1182SingaporeCited for the principle that a scheme company must disclose all material information to the scheme creditors.
In re Sunbird Business Services LtdNot specifiedYes[2020] Bus LR 2371England and WalesCited for the principle that creditors need information to assess whether the allocation of loss and the division of benefits is fair.
Re Virgin Atlantic Airways LtdHigh Court of JusticeYes[2020] EWHC 2376 (Ch)England and WalesCited for the principle that where creditors who would rank pari passu in a liquidation are treated differently under or excluded from the scheme, this should be fully disclosed and explained.
The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appealSingapore Court of AppealYes[2012] 2 SLR 213SingaporeCited for the classification test: those creditors whose rights are so dissimilar to each other’s that they cannot sensibly consult together with a view to their common interest must vote in different classes.
UDL Argos Engineering & Heavy Industries Co Ltd & Others and Li Oi Lin & OthersHong Kong Court of Final AppealYes(2001) 4 HKCFAR 358Hong KongCited for the principle that the private interests of related party creditors do not warrant placing them in a separate class but generally warrant attributing less weight to their votes.
Wah Yuen Electrical Engineering Pte Ltd v Singapore Cables Manufacturers Pte LtdSingapore High CourtYes[2003] 3 SLR(R) 629SingaporeCited for the principle that the private interests of related party creditors do not warrant placing them in a separate class but generally warrant attributing less weight to their votes.
Re Codere Finance 2 (UK) LtdHigh Court of JusticeYes[2020] EWHC 2441 (Ch)England and WalesCited for the principle that the question of classification essentially asks whether the scheme should be regarded as a single arrangement or a number of linked arrangements with distinct classes.
Re Hawk Insurance Co LtdEngland and Wales Court of AppealYes[2001] 2 BCLC 480England and WalesCited for the principle that the question of classification essentially asks whether the scheme should be regarded as a single arrangement or a number of linked arrangements with distinct classes.
Re Sunbird Business Services LtdHigh Court of JusticeYes[2020] EWHC 2860 (Ch)England and WalesCited for the principle that the court considers any rights conferred or to be conferred in other agreements that are provided for under the terms of the scheme or are conditional on the scheme.
Re Stemcor Trade Finance LtdNot specifiedYes[2016] BCC 194England and WalesCited for the principle that the court considers any rights conferred or to be conferred in other agreements that are provided for under the terms of the scheme or are conditional on the scheme.
Re Noble Group Ltd (No 1)Not specifiedYes[2019] 2 BCLC 505England and WalesCited for the principle that the court does not consider rights that are genuinely independent of the scheme and restructuring in a realistic commercial sense.
Re Telewest Communications plc (No 1)Not specifiedYes[2005] 1 BCLC 752England and WalesCited for the principle that the court does not consider rights that are genuinely independent of the scheme and restructuring in a realistic commercial sense.
SK Engineering & Construction Co Ltd v Conchubar Aromatics Ltd and another appealSingapore Court of AppealYes[2017] 2 SLR 898SingaporeCited for the principle that the court should be satisfied that any assignment of debts in the time leading up to the company’s financial difficulties was genuine and made at arm’s length.
Re Gategroup Guarantee LtdHigh Court of JusticeYes[2021] EWHC 304 (Ch)England and WalesCited for the principle that the artificiality of the structure would not deprive the court of jurisdiction to sanction the scheme where the artificial structure is the only solution to enable a restructuring to be effected.
Re AI Scheme LtdHigh Court of JusticeYes[2015] EWHC 1233 (Ch)England and WalesCited for the principle that the structure had not been created as a matter of mere artifice but rather was grounded in commercial necessity.
Re Ansett Australia Ltd (ACN 004 209 410) and OthersNot specifiedYes[2006] 56 ACSR 718AustraliaCited regarding a deed of compromise in an administration.
Re ACN 004 987 866 Pty Ltd (formerly Hilton’s Stores Pty Ltd)Not specifiedYes(2003) 21 ACLC 1474AustraliaCited regarding deeds of company arrangement in an administration.
In re Owens CorningUnited States Court of Appeals for the Third CircuitYes419 F 3d 195 (3rd Cir, 2005)United StatesCited regarding reorganisation under Chapter 11 of the US Bankruptcy Code.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Section 71 of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 210 of the Companies Act (Cap 50, 2006 Rev Ed)Singapore
Section 210(3AB)(a)–(b) of the Companies ActSingapore
Section 9A(2)–(4) of the Interpretation Act (Cap 1, 2002 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Pre-packaged scheme
  • Scheme of arrangement
  • Deed poll
  • Debt sale
  • Related creditors
  • Potential white knight
  • Vote solicitation
  • Statutory majority requirements
  • Classification of creditors
  • Adequate disclosure
  • Bona fides

15.2 Keywords

  • Insolvency
  • Restructuring
  • Scheme of Arrangement
  • Pre-Packaged Scheme
  • Creditors
  • Disclosure
  • Classification
  • Singapore
  • IRDA
  • Companies Act

17. Areas of Law

Area NameRelevance Score
Restructuring and Dissolution95
Schemes of Arrangement95
Insolvency Law90
Company Law85
Corporate Law80
Bankruptcy75
Disclosure70
Classification of scheme creditors65
Winding Up60
Deed Poll Structure55
Commercial Law50
Contract Law30
Breach of Contract30
Evidence20
Civil Procedure20
Arbitration15
Summary Judgement10

16. Subjects

  • Insolvency
  • Schemes of Arrangement
  • Corporate Restructuring