Mingda Holding Pte Ltd (in liquidation): Liquidator's Authority & Creditor Funding Agreement under IRDA
In the matter of Mingda Holding Pte Ltd (in liquidation), the liquidator, Jason Aleksander Kardachi, applied for authorization to appoint Fullerton Law Chambers LLC as solicitors and to enter into a creditor funding agreement with Amalgamated Metal Trading Limited (AMT). AMT also applied to be given an advantage under s 204(3) of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA). The applications were opposed by Shanghai Ran Yu Lian Trading Co Ltd, Orient Nickel Pte Ltd, and Mr. Yang Mingdong. The High Court allowed SUM 125 in part, granting authorization for the solicitor appointment prospectively and approving the funding agreement. OA 26 was allowed, finding the advantage sought by AMT to be fair and reasonable.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
SUM 125 allowed in part; OA 26 allowed.
1.3 Case Type
Insolvency
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Liquidator seeks authority to appoint solicitors and enter a funding agreement. Court authorizes appointment prospectively and approves the funding agreement.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Jason Aleksander Kardachi (in his capacity as liquidator of Mingda Holding Pte Ltd (in liquidation)) | Applicant | Individual | Application Allowed in Part | Partial | Tham Wei Chern, Samuel Ang Rong En |
| Amalgamated Metal Trading Limited | Applicant | Corporation | Application Allowed | Won | Chua Xinying, Chia Su Min, Rebecca |
| Mingda Holding Pte Ltd (in liquidation) | Respondent | Corporation | Application Granted | Won | |
| Shanghai Ran Yu Lian Trading Co Ltd | Other | Corporation | Application Opposed | Lost | Justin Yip Yung Keong, Lam Zhen Yu, Wong Sze Qi |
| Orient Nickel Pte Ltd | Other | Corporation | Application Opposed | Lost | Pillai Pradeep G, Lin Shuling Joycelyn, Chong Wei Jie |
| Yang Mingdong | Other | Individual | Application Opposed | Lost | Lee Ping, Yong Ying Jie |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Aedit Abdullah | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Tham Wei Chern | Fullerton Law Chambers LLC |
| Samuel Ang Rong En | Fullerton Law Chambers LLC |
| Chua Xinying | Allen & Gledhill LLP |
| Chia Su Min, Rebecca | Allen & Gledhill LLP |
| Justin Yip Yung Keong | Withers KhattarWong LLP |
| Lam Zhen Yu | Withers KhattarWong LLP |
| Wong Sze Qi | Withers KhattarWong LLP |
| Pillai Pradeep G | PRP Law LLC |
| Lin Shuling Joycelyn | PRP Law LLC |
| Chong Wei Jie | PRP Law LLC |
| Lee Ping | Shook Lin & Bok LLP |
| Yong Ying Jie | Shook Lin & Bok LLP |
4. Facts
- Mingda is in insolvent liquidation, wound up by court order on 19 August 2022.
- The Liquidator identified suspicious transactions between Mingda and its creditors, Orient and Mr Yang.
- Mr Yang was the sole director and shareholder of Mingda at the time of its entry into insolvent liquidation.
- The Liquidator identified six transactions between Mingda and Orient prior to Mingda’s winding up that constituted unfair preferences.
- The Liquidator identified a payment made by Mingda to Mr Yang on the same day as the winding up order.
- The Committee of Inspection refused to grant authorization to appoint solicitors.
- Mingda did not have sufficient funds for the Liquidator to pursue claims against Orient and Mr Yang.
5. Formal Citations
- Re Mingda Holding Pte Ltd and another matter, Companies Winding Up No 149 of 2022 (Summons No 125 of 2024) and Originating Application No 26 of 2024, [2024] SGHC 130
6. Timeline
| Date | Event |
|---|---|
| Mingda Holding Pte Ltd wound up by court order. | |
| Liquidator called a meeting of Mingda’s creditors. | |
| First meeting of the Committee of Inspection. | |
| Liquidator appointed Fullerton Law Chambers LLC as solicitors. | |
| Liquidator and AMT entered into the Funding Agreement. | |
| Liquidator filed SUM 125 for court authorization. | |
| Hearing of SUM 125 and OA 26. | |
| Judgment reserved. |
7. Legal Issues
- Retrospective Authorization of Solicitor Appointment
- Outcome: The court held that it does not have the power to grant retrospective authorization for a liquidator to appoint solicitors under s 144(1)(f) of the IRDA.
- Category: Procedural
- Approval of Creditor Funding Agreement
- Outcome: The court authorized the liquidator to enter into the Funding Agreement with AMT, finding it to be in the interests of the company and its creditors.
- Category: Substantive
- Prospective Advantage for Creditor Funding
- Outcome: The court granted AMT an advantage under s 204(3) of the IRDA, finding it to be fair and reasonable in the circumstances.
- Category: Substantive
8. Remedies Sought
- Authorization to appoint solicitors
- Authorization to enter into a creditor funding agreement
- Advantage under s 204(3) of the IRDA
9. Cause of Actions
- Unfair Preferences
- Void Disposition of Property
10. Practice Areas
- Liquidation
- Corporate Restructuring
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Kirkham Pte Ltd (in compulsory liquidation) | High Court | Yes | [2023] 5 SLR 635 | Singapore | Cited for the principle that the threshold for obtaining authorization from the court under s 144(1)(f) of the IRDA is not a high one and that the court does not have any power of retrospective authorisation or ratification of a past appointment. |
| Re Eye-Biz Pte Ltd (in compulsory liquidation) | High Court | Yes | [2024] SGHC 60 | Singapore | Cited for the principle that the court can grant retrospective authorisation of a liquidator’s appointment of solicitors if the prior appointment by the liquidator was for the purpose of commencing the very application for that approval itself. |
| Lavrentiadis, Lavrentios v Dextra Partners (in liquidation) and another matter | High Court | Yes | [2023] 5 SLR 1288 | Singapore | Cited for the principle that it is common practice for funders to err on the side of caution and impose a condition precedent that court approval be obtained even where an assignment is being made under s 144(2)(b) and for the applicable principles for determining an application under ss 144(1)(g) and 144(2)(b) of the IRDA. |
| Re Vanguard Energy Pte Ltd | High Court | Yes | [2015] 4 SLR 597 | Singapore | Cited for the principle that s 144(2)(b) enables a liquidator to sell not only the cause of action itself, but the fruits of a cause of action as well and that the statutory powers of assignment relied on by the Liquidator in the present case are statutory exceptions to the doctrine of maintenance and champerty. |
| Solvadis Commodity Chemicals Gmbh v Affert Resources Pte Ltd | High Court | Yes | [2018] 5 SLR 1337 | Singapore | Cited for the principle that a court does not readily interfere with a liquidator’s discretion and that the statutory powers of assignment relied on by the Liquidator in the present case are statutory exceptions to the doctrine of maintenance and champerty. |
| PricewaterhouseCoopers LLP and others v Celestial Nutrifoods Ltd (in compulsory liquidation) | Court of Appeal | Yes | [2015] 3 SLR 665 | Singapore | Cited for the principle that a course of action advantageous to the Liquidator does not ipso facto mean that he is not acting in good faith in the interests of the creditors. |
| Song Jianbo v Sunmax Global Capital Fund 1 Pte Ltd (in compulsory liquidation) | High Court | Yes | [2023] 4 SLR 1575 | Singapore | Cited for the applicable principles to an application under s 204(3) of the IRDA and that extending the court’s jurisdiction to include prospective orders served to provide a measure of assurance to funding creditors. |
| Re Attilan Group Ltd | High Court | Yes | [2018] 3 SLR 898 | Singapore | Cited as an example of the provisions found in the IRDA allowing for various levels of priority to be granted to rescue financing. |
| Re Design Studio Group Ltd and other matters | High Court | Yes | [2020] 5 SLR 850 | Singapore | Cited as an example of the provisions found in the IRDA allowing for various levels of priority to be granted to rescue financing. |
| Jarbin Pty Ltd v Clutha Ltd (in liq) | New South Wales Supreme Court | Yes | (2008) 208 ALR 242 | Australia | Cited for the principle that the court must strive to achieve a just result which offers sufficient incentive to funding creditors, whilst not being punitive to the other non-funding creditors. |
| Re Waterfront Investments Group Pty Ltd (in liq) | New South Wales Supreme Court | Yes | [2016] NSWSC 687 | Australia | Cited for the principle that it is just for AMT to be rewarded for assuming a disproportionately larger burden relative to its stake in Mingda’s liquidation. |
| State Bank of New South Wales and another v Brown (as liq of Parkston Ltd (in liq)) and others | New South Wales Court of Appeal | Yes | (2001) 38 ACSR 715 | Australia | Cited for the principle that the grant of a 100 per cent advantage in cases where recovery turns out to be relatively small can also support the objective of benefiting creditors generally, by encouraging the support of litigation in cases where there is a prospect of a large recovery which would inure for the benefit of all creditors, but which may in certain eventualities result only in a small recovery. |
| Kang Wah Construction Sdn Bhd v Chan Ali Min Property Sdn Bhd | Malaysian High Court | Yes | [1999] 4 MLJ 262 | Malaysia | Cited for the principle that a liquidator could still appoint a solicitor without the authorisation of the court or the COI and the absence of such authority does not render the action incompetent nor deny the solicitor of standing. |
| In re J Leslie Engineers Co Ltd | English High Court | Yes | [1976] 1 WLR 292 | England and Wales | Cited for the principle that s 130(1) is silent on the recovery of property that is the subject of an avoided disposition, as it leaves that up to the general law. |
| Hollicourt (Contracts) Ltd (in liquidation) v Bank of Ireland | English Court of Appeal | Yes | [2001] 1 BCLC 233 | England and Wales | Cited for the principle that the cause of action available to the company is a “restitutionary” claim. |
| Officeserve Technologies Ltd (in compulsory liquidation) v Annabel’s (Berkeley Square) Ltd and others | English High Court | Yes | [2018] 3 WLR 1568 | England and Wales | Cited for the principle that the characterisation of the claim as “restitutionary” does not mean that the claim made by the company against the recipient must necessarily be a claim in what used to be called restitution, and is now called unjust enrichment. |
| In re Fowlds (A Bankrupt) | English High Court | Yes | [2022] 1 WLR 61 | England and Wales | Cited for the principle that s 130(1) of the IRDA is of this “slightly different” character than the other statutory avoidance provisions (which do legislate a remedy). |
13. Applicable Rules
| Rule Name |
|---|
| Insolvency, Restructuring and Dissolution (Corporate Insolvency and Restructuring) Rules 2020 |
| r 148 of the Insolvency, Restructuring and Dissolution (Corporate Insolvency and Restructuring) Rules 2020 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 144 of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 144(1)(f) of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 144(1)(g) of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 144(2)(b) of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 204 of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 204(3) of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 225 of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 130(1) of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 203(1)(a) of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 190 of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Section 226(3) of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 328(10) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Australian Corporations Act 2001 (Cth) | Australia |
| Section 564 of the Australian Corporations Act 2001 (Cth) | Australia |
15. Key Terms and Keywords
15.1 Key Terms
- Insolvent Liquidation
- Liquidator
- Committee of Inspection
- Creditor Funding Agreement
- Unfair Preference
- Void Disposition
- Distribution Waterfall
- Indemnity
- Recovered Assets
- Funder's Costs
- Funder Creditor Amount
- JPM's Costs
15.2 Keywords
- Insolvency
- Liquidation
- Funding Agreement
- Liquidator
- Creditors
- IRDA
- Solicitor Appointment
- Retrospective Authorization
- Prospective Advantage
16. Subjects
- Insolvency
- Corporate Law
- Civil Procedure
17. Areas of Law
- Insolvency Law
- Winding up