PT Bank Negara Indonesia v Farooq Ahmad Mann: Judicial Management, Proof of Debt & Extension of Time

The General Division of the High Court of Singapore heard three applications related to the judicial management of Golden Mountain Textile and Trading Pte Ltd. PT Bank Negara Indonesia (Persero) TBK, Singapore Branch (BNI) and Emirates NBD Bank (PJSC), Singapore Branch (Emirates) sought orders to nullify the judicial management resolutions passed at a pre-appointment meeting, arguing that the interim judicial manager, Farooq Ahmad Mann, unfairly admitted proofs of debt from Golden Legacy Pte Ltd (GL) and AJCapital Advisory Pte Ltd. Mann, in his capacity as judicial manager, applied for an extension of time to put forward his statement of proposals. The court dismissed BNI's and Emirates' applications, finding no unfair prejudice, and allowed Mann's application for an extension of time.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Originating Applications Nos 130 and 184 are dismissed, and Originating Application No 448 is allowed.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court dismisses applications to nullify judicial management, finding no unfair prejudice in admitting proofs of debt. Extension of time for statement of proposals granted.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
PT Bank Negara Indonesia (Persero) TBK, Singapore BranchClaimantCorporationClaim DismissedDismissed
Farooq Ahmad Mann (in his capacity as judicial manager)Respondent, ApplicantIndividualApplication AllowedWon
Golden Mountain Textile and Trading Pte Ltd (in judicial management)RespondentCorporationNeutralNeutral
Emirates NBD Bank (PJSC), Singapore BranchClaimantCorporationClaim DismissedDismissed

3. Judges

Judge NameTitleDelivered Judgment
Goh YihanJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Sim ChongSim Chong LLC
Chen SixueSim Chong LLC
Vergis S AbrahamProvidence Law Asia LLC
Lau Hui Ming KennyProvidence Law Asia LLC
Alston YeongProvidence Law Asia LLC
Huang Xinli DanielProvidence Law Asia LLC
Pang Chong Ren AlexanderTan Peng Chin LLC
Chloe Chong Wei ShanTan Peng Chin LLC

4. Facts

  1. The Company is under interim judicial management.
  2. BNI and Emirates objected to the admission of GL's and AJCapital's proofs of debt.
  3. The interim judicial manager admitted all creditors’ proofs of debts for voting at the Pre-Appointment Meeting.
  4. A statutory majority was reached at the Pre-Appointment Meeting, and the Company was placed under judicial management.
  5. BNI and Emirates argued that the interim judicial manager’s approach to the adjudication of GL’s and AJCapital’s proofs of debt was fundamentally flawed.
  6. GL's claim was supported by an intercompany loan agreement and reflected in the Company's audited financial statements.
  7. The interim judicial manager suspected the Company is not a true creditor of GL.

5. Formal Citations

  1. PT Bank Negara Indonesia (Persero) TBK, Singapore BranchvFarooq Ahmad Mann (in his capacity as judicial manager) and another and other matters, Originating Applications Nos 130, 184 and 448 of 2023, [2023] SGHC 249

6. Timeline

DateEvent
Company and GL applied for moratoriums under s 64(1) of the IRDA
Emirates applied for the Company to be wound up
Company applied to restrain Emirates from taking further steps in CWU 139
AJCapital's Scenario Analysis Report was issued
Company filed an application pursuant to s 71(1) of the IRDA to seek sanction of a scheme of arrangement
Directors and shareholders of the Company passed a resolution to place the Company under interim judicial management
BNI received two letters from the Company’s Singapore counsel
Company’s directors informed the first respondent that they would need more time to prepare and properly lay the Statement of Affairs
Official Receiver informed the first respondent over a telephone call that it had no objections to the extension of time sought
First respondent applied for a further extension of time to 2 February 2023
Official Receiver granted this further extension of time
First respondent wrote to the Company’s creditors to inform them that the Pre-Appointment Meeting would be convened on 2 February 2023
First respondent received a letter from Emirates’s solicitors
First respondent received a letter from BNI’s solicitors
GL submitted their proxy forms
Pre-Appointment Meeting was convened
First respondent applied successfully for CWU 139 to be dismissed
BNI filed OA 130
Emirates filed OA 184
Judgment reserved
Judgment delivered

7. Legal Issues

  1. Unfair Prejudice in Judicial Management
    • Outcome: The court found no unfair prejudice in the judicial manager's decision to admit the proofs of debt.
    • Category: Substantive
    • Sub-Issues:
      • Admission of proof of debt
      • Differential treatment of creditors
  2. Duties of Interim Judicial Manager
    • Outcome: The court held that the interim judicial manager fulfilled his legal duties in admitting the proofs of debt.
    • Category: Substantive
    • Sub-Issues:
      • Adjudication of proofs of debt
      • Duty to act in the interests of creditors
  3. Extension of Time for Statement of Proposals
    • Outcome: The court granted the judicial manager an extension of time to put forward his statement of proposals.
    • Category: Procedural
    • Sub-Issues:
      • Good reason for extension
      • Impact of legal challenges on judicial management process

8. Remedies Sought

  1. Declaration that judicial management resolutions are null and void
  2. Discharge of the Company from judicial management
  3. Removal of the judicial manager
  4. Extension of time to put forward statement of proposals

9. Cause of Actions

  • Application to nullify judicial management resolutions
  • Application for extension of time to put forward statement of proposals

10. Practice Areas

  • Insolvency
  • Restructuring
  • Commercial Litigation

11. Industries

  • Textile
  • Trading
  • Financial Services

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Re HTL International Holdings Pte LtdHigh CourtYes[2021] 5 SLR 586SingaporeCited for the interpretation of s 115 of the IRDA and its predecessor provision, s 227R of the Companies Act.
Four Private Investment Funds v Lomas and othersN/AYes[2009] 1 BCLC 161N/ACited for the definition of unfair prejudice.
Yihua Lifestyle Technology Co, Ltd and another v HTL International Holdings Pte Ltd and othersCourt of AppealYes[2021] 2 SLR 1141SingaporeCited for the two-stage test to determine whether a judicial manager has acted unfairly.
Re KS Energy Ltd and another matterHigh CourtYes[2020] 5 SLR 1435SingaporeCited for comparing the role of an interim judicial manager to that of a provisional liquidator.
DB International Trust (Singapore) Ltd v Medora Xerxes Jamshid and anotherHigh CourtYes[2023] SGHC 83SingaporeCited for the explanation that it would not make sense in the early stages of liquidation for considerable work to be done in the adjudication of a proof of debt for the limited purpose of voting.
Revenue and Customs Commissioners v Maxwell and anotherEnglish Court of AppealYes[2011] 2 BCLC 301EnglandCited for the principle that a judicial manager needs to be satisfied that there is a prima facie case against the company in order to admit a proof of debt.
Re Ice-Mack Pte Ltd (in liquidation)High CourtYes[1989] 2 SLR(R) 283SingaporeCited for the principle that a claim reflected in the company's audited financial statements is strong evidence of the correctness of the credit or debit balance so confirmed.
SIC College of Business and Technology Pte Ltd v Yeo Poh Siah and othersCourt of AppealYes[2016] 2 SLR 118SingaporeCited for the principle that a claim reflected in the company's audited financial statements is strong evidence of the correctness of the credit or debit balance so confirmed.
SK Engineering & Construction Co Ltd v Conchubar Aromatics Ltd and another appealCourt of AppealYes[2017] 2 SLR 898SingaporeCited for the principle that a claim reflected in the company's audited financial statements is strong evidence of the correctness of the credit or debit balance so confirmed.
Good Property Land Development Pte Ltd (in liquidation) v Société-GénéraleCourt of AppealYes[1996] 1 SLR(R) 884SingaporeCited for the requirements for set-off to apply.
The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appealCourt of AppealYes[2012] 2 SLR 213SingaporeCited for the principle that the duty to provide written grounds puts the onus on the scheme manager to look at each proof more carefully in the proper exercise of his quasi-judicial function.
Re a debtor (No 222 of 1990), ex parte the Bank of Ireland and othersEnglish High CourtYes[1992] BCLC 137EnglandCited for the principle that a creditors’ meeting is clearly not the forum to go into lengthy debates as to the exact status of a debt.
Re Bulb Energy LtdEnglish High CourtYes[2021] EWHC 3680 (Ch)EnglandCited for the principle that an extension should be allowed where there is good reason.
Re V McGeown Wholesale Wines and Spirits Ltd’s (in administration) ApplicationN/AYes[1997] NIJB 190Northern IrelandCited for the principle that an administrator must be live to the limited purpose of the administration and must not continue with the administration beyond the point when it is clear that the purpose or purposes specified cannot be achieved or have been achieved.
SingTel Optus Pty Ltd and others v WestonNew South Wales Supreme CourtYes[2012] NSWSC 1002AustraliaCited for the principle that a high threshold must be crossed for personal costs to be ordered against an insolvency practitioner.
Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd and others (No 2)New South Wales Supreme CourtYes(2001) 39 ACSR 622AustraliaCited for the principle that it is not appropriate for a court to award personal costs against an insolvency practitioner even if he has made an error of commercial judgment or failed to make inquiries and to report to a level of thoroughness made impracticable by urgent circumstances.
Re Wilson Lovatt & Sons LtdEnglish High CourtYes[1977] 1 All ER 274EnglandCited for the principle that a liquidator must be entitled to defend himself without being subjected to the risk of having costs awarded against him personally.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 115 of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 107 of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 107(3)(a) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 94 of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 94(4)(c) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 94(6) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 88(1) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 88(2)(a) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 89(2) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 89(4) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 219 of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 219(1) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 219(2) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 217(2) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 71(1) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 71(3)(a)(i) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Section 71(3)(d) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
Companies Act 1967Singapore
Section 210(10) of the Companies Act 1967Singapore
Section 210(3AB)(a) of the Companies Act 1967Singapore
Section 210(3AB)(b) of the Companies Act 1967Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Judicial management
  • Interim judicial manager
  • Proof of debt
  • Pre-appointment meeting
  • Statement of proposals
  • Unfair prejudice
  • Insolvency
  • Creditors
  • Debts
  • Set-off

15.2 Keywords

  • Judicial management
  • Proof of debt
  • Interim judicial manager
  • Extension of time
  • Insolvency
  • Singapore
  • IRDA

17. Areas of Law

Area NameRelevance Score
Insolvency Law95
Judicial Management90
Restructuring and Dissolution90
Proof of Debt70
Extension of Validity60
Duties of interim judicial manager60
Evidence30
Civil Procedure20

16. Subjects

  • Insolvency Law
  • Judicial Management
  • Proof of Debt
  • Extension of Time