Babel Holding Ltd Scheme of Arrangement: Leave to Convene Meeting, Creditor Classification
The High Court of Singapore heard an application by Babel Holding Limited for leave to convene a scheme meeting under Section 210 of the Companies Act 1967. Parastate Labs, Inc., opposed the application, arguing for separate creditor classification, objecting to the deed poll structure, and alleging insufficient disclosure. Justice Aedit Abdullah granted the application, finding no merit in the objections and holding that the creditors were appropriately classified, the deed poll structure was permissible, and sufficient disclosure was made. The court allowed the application for Babel Holding Limited to convene a scheme meeting.
1. Case Overview
1.1 Court
General Division of the High Court of the Republic of Singapore1.2 Outcome
Application granted in its entirety.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court grants Babel Holding Ltd leave to convene a scheme meeting, rejecting objections on creditor classification and deed poll structure.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Babel Holding Limited | Applicant | Corporation | Application Granted | Won | Chan Chee Yin Andrew, Alexander Lawrence Yeo, Jo Tay Yu Xi, Yeoh Tze Ning, Lee Suet Yean Cherlyn, Richard Xu Hanqi |
| Parastate Labs, Inc | Non-party | Corporation | Objections Dismissed | Lost | Foo Maw Shen, Chu Hua Yi, Tan Jinwen Mark |
| Smarti Labs Main LP | Non-party | Limited Liability Partnership | Neutral | Neutral | Choong Guo Yao Sean, Lee Pei Yi Jamey |
| Wang Li | Non-party | Individual | Neutral | Neutral | Chew Di Shun Dickson, Yuen Ai Zhen Carol |
| Yang Zhou | Non-party | Individual | Neutral | Neutral | Chan Michael Karfai |
| Genesis Global Capital LLC | Non-party | Corporation | Neutral | Neutral | Tang Yuan Jonathan, Low Hui Xuan Carrisa |
| Gate Technology Inc | Non-party | Corporation | Neutral | Neutral | Edwin Yang Yingrong, Poh Yee Shing |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Aedit Abdullah | Judge of the High Court | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Chan Chee Yin Andrew | Allen & Gledhill LLP |
| Alexander Lawrence Yeo | Allen & Gledhill LLP |
| Jo Tay Yu Xi | Allen & Gledhill LLP |
| Yeoh Tze Ning | Allen & Gledhill LLP |
| Lee Suet Yean Cherlyn | Allen & Gledhill LLP |
| Richard Xu Hanqi | Allen & Gledhill LLP |
| Foo Maw Shen | FC Legal Asia LLC |
| Chu Hua Yi | FC Legal Asia LLC |
| Tan Jinwen Mark | FC Legal Asia LLC |
| Choong Guo Yao Sean | Meritus Law LLC |
| Lee Pei Yi Jamey | Meritus Law LLC |
| Chew Di Shun Dickson | RCL Chambers Law Corporation |
| Yuen Ai Zhen Carol | RCL Chambers Law Corporation |
| Chan Michael Karfai | Breakpoint LLC |
| Tang Yuan Jonathan | Prolegis LLC |
| Low Hui Xuan Carrisa | Prolegis LLC |
| Edwin Yang Yingrong | Shook Lin & Bok LLP |
| Poh Yee Shing | Shook Lin & Bok LLP |
4. Facts
- Babel Holding Limited applied for leave to convene a scheme meeting.
- Parastate Labs, Inc. opposed the application.
- The application was based on a proposed scheme of arrangement.
- The proposed scheme involved a deed poll structure.
- Scheme creditors could elect between Babel Recovery Coin or contingent value rights.
- Parastate argued for a separate class of creditors.
- Parastate claimed to be a secured creditor due to a trust arrangement.
5. Formal Citations
- Re Babel Holding Ltd, Originating Application No 881 of 2023, [2023] SGHC 329
6. Timeline
| Date | Event |
|---|---|
| Entities in the Babel Group applied for moratoria protection. | |
| Moratoria applications granted. | |
| Entities in the Babel Group applied to extend the moratoria orders. | |
| Applications to extend moratoria orders granted. | |
| Present application filed. | |
| Hearing date. | |
| Hearing date. | |
| Judgment date. |
7. Legal Issues
- Creditor Classification
- Outcome: The court held that Parastate was correctly classified together with the rest of the unsecured creditors.
- Category: Substantive
- Sub-Issues:
- Dissimilarity of legal rights
- Common interest of creditors
- Deed Poll Structure
- Outcome: The court found the Deed Poll Structure and substantial consolidation to be appropriate.
- Category: Substantive
- Sub-Issues:
- Substantial consolidation
- Pooling of assets
- Fairness to creditors
- Full and Frank Disclosure
- Outcome: The court found that Parastate had not established that the applicant did not make full and frank disclosure in this application.
- Category: Procedural
- Sub-Issues:
- Material information
- Fairness of scheme
- Abuse of Process
- Outcome: The court found that there was no abuse of process by the applicant.
- Category: Procedural
8. Remedies Sought
- Leave to convene a scheme meeting
- Declaration of trust (alleged)
- Equitable compensation (alleged)
9. Cause of Actions
- Application for leave to convene a scheme meeting
- Breach of Trust (alleged)
- Breach of Fiduciary Duties (alleged)
10. Practice Areas
- Restructuring
- Insolvency
- Corporate Law
11. Industries
- Financial Services
- Cryptocurrency
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Pathfinder Strategic Credit LP and another v Empire Capital Resources Pte Ltd and another appeal | Court of Appeal | Yes | [2019] 2 SLR 77 | Singapore | Cited for the principles and considerations underlying the court’s decision on whether to grant leave to convene a creditors’ meeting pursuant to s 210(1) of the Companies Act. |
| 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 issues considered at the leave stage relating to the court’s jurisdiction and the need for separate meetings for different classes of creditors. |
| Re T&N Ltd (No 3) | English High Court | Yes | [2007] 1 BCLC 563 | England | Cited for the principle that matters that will lead the court to subsequently refuse to sanction a scheme should also be brought to the court’s attention at the leave stage. |
| Re Punj Lloyd Pte Ltd | High Court | Yes | [2015] SGHC 321 | Singapore | Cited for the principle that an order under s 210(1) would be refused if it is shown that the application amounts to an abuse of process. |
| Re Kuala Lumpur Industries Bhd | Malaysian High Court | Yes | [1990] 2 MLJ 180 | Malaysia | Cited for the principle that the company should present a restructuring proposal with sufficient particulars to enable the court to assess that it is feasible and merits due consideration by the creditors. |
| Daewoo Singapore Pte Ltd v CEL Tractors Pte Ltd | Court of Appeal | Yes | [2001] 2 SLR(R) 791 | Singapore | Cited for the principle that a scheme does not compromise a creditor’s claim against a third party, such as a guarantor. |
| Von Roll Asia Pte Ltd v Goh Boon Bay and others | High Court | Yes | [2018] 4 SLR 1053 | Singapore | Cited regarding the nature of a dishonest assistant’s liability. |
| Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd (in administrative receivership) and others | English Court of Appeal | Yes | [2012] Ch 453 | England | Cited for the principle that claims for equitable compensation for breach of trust or breach of fiduciary duties are unsecured personal claims. |
| Re Bank of Credit and Commerce International SA (No 3) | English Court of Appeal | Yes | [1993] BCLC 1940 | England | Cited for the principle that the affairs of the group companies are so hopelessly intertwined that a pooling of their assets is the only sensible way to proceed. |
| Re DSG Asia Holdings Pte Ltd | High Court | Yes | [2022] 3 SLR 1250 | Singapore | Cited for the factors to consider in determining whether a Deed Poll Structure and/or substantive consolidation is appropriate. |
| Re Babel Holding Ltd and other matters | High Court | Yes | [2023] SGHC 98 | Singapore | Cited for the preliminary view that the court does not find either substantive consolidation or the Deed Poll Structure to be inappropriate in principle. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act 1967 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Scheme of arrangement
- Scheme meeting
- Deed poll structure
- Creditor classification
- Moratoria protection
- Babel Recovery Coin
- Substantial consolidation
- Insolvent liquidation
15.2 Keywords
- scheme of arrangement
- creditor classification
- insolvency
- Babel Holding
- Parastate Labs
- Companies Act
- Singapore
16. Subjects
- Insolvency
- Corporate Restructuring
- Schemes of Arrangement
17. Areas of Law
- Insolvency Law
- Companies Act
- Schemes of Arrangement