Bu Shen Xi (S) Pte. Ltd. Winding Up: Special Resolution Validity & Insolvency Under IRDA
Bu Shen Xi (S) Pte. Ltd. applied to the General Division of the High Court of Singapore on 19 July and 8 August 2024, for a winding-up order against itself, based on a special resolution under s 125(1)(a) and/or inability to pay debts under s 125(1)(e) of the Insolvency, Restructuring and Dissolution Act 2018. The court, presided over by Justice Goh Yihan, granted the winding-up order, finding that the special resolution was validly passed and, alternatively, that the company was unable to pay its debts as they fell due.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Winding-up order granted pursuant to s 125(1)(a) of the IRDA and, alternatively, s 125(1)(e) of the same.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Winding-up application by Bu Shen Xi (S) Pte. Ltd. based on special resolution and insolvency. The court granted the winding-up order under s 125(1)(a) and s 125(1)(e) of the IRDA.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Official Receiver | Non-party | Government Agency | Neutral | Neutral | Jeffrey Yip of Insolvency & Public Trustee’s Office |
| Bu Shen Xi (S) Pte. Ltd. | Claimant | Corporation | Winding-up order granted | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Goh Yihan | Judge of the High Court | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Jeffrey Yip | Insolvency & Public Trustee’s Office |
| Kok Jia An Alwyn | Robert Wang & Woo LLP |
| Teoh Seok Pin Audrey | Robert Wang & Woo LLP |
| Iffera Ng Lu Hui | Robert Wang & Woo LLP |
4. Facts
- Bu Shen Xi (S) Pte Ltd applied for a winding-up order against itself.
- The company's application was based on ss 125(1)(a) and/or 125(1)(e) of the IRDA.
- The company's total issued share capital is $150,000.
- The company has two directors, Mr Tan Kim Huat and Mr Li Wangyu.
- Ms Sham Hiu Fan holds 40% of the issued share capital but had not fully paid for her shares.
- The company resolved by a special resolution that it be wound up by the court.
- The company stated that it was unable to pay its debts as and when they fall due.
5. Formal Citations
- Re Bu Shen Xi (S) Pte Ltd, Companies Winding Up No 164 of 2024, [2024] SGHC 247
6. Timeline
| Date | Event |
|---|---|
| Company resolved by special resolution to be wound up | |
| Company issued letter of demand to Sham Hiu Fan for outstanding sum of $20,000 | |
| Annual General Meeting of the Company held | |
| Affidavit of Tan Kim Huat dated | |
| Application advertised | |
| Affidavit of Tan Kim Huat dated | |
| Hearing held | |
| Winding-up order granted | |
| Judgment Date | |
| Company incorporation date |
7. Legal Issues
- Validity of Special Resolution for Winding Up
- Outcome: The court determined that the special resolution to wind up the Company was validly passed because a shareholder, SHF, was not entitled to vote due to outstanding payments on her shares.
- Category: Substantive
- Sub-Issues:
- Entitlement to vote
- Compliance with s 184(1) of the Companies Act 1967
- Related Cases:
- [1991] BCLC 224
- Inability to Pay Debts
- Outcome: The court found that the Company was unable to pay its debts as and when they fell due, based on the cash flow insolvency test.
- Category: Substantive
- Sub-Issues:
- Cash flow insolvency
- Current assets vs current liabilities
- Related Cases:
- [2021] 2 SLR 478
8. Remedies Sought
- Winding-up order
9. Cause of Actions
- Winding up
10. Practice Areas
- Insolvency
- Corporate Restructuring
- Liquidation
11. Industries
- Food and Beverage
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Fusionex Pte Ltd (Resorts World at Sentosa Pte Ltd, non-party) | General Division of the High Court | Yes | [2024] 4 SLR 956 | Singapore | Cited for the principle that there is a limited discretion to withhold winding up under s 125(1)(a) of the IRDA and the factors to consider when exercising that discretion. |
| Superpark Oy v Super Park Asia Group Pte Ltd and others | Court of Appeal | Yes | [2021] 1 SLR 998 | Singapore | Cited to distinguish between compulsory and voluntary winding up, noting that compulsory winding up is subject to oversight by the court. |
| Sinfeng Marine Services Pte Ltd v Taylor, Joshua James and another and other appeals | Court of Appeal | Yes | [2020] 2 SLR 1332 | Singapore | Cited to describe compulsory winding up as being conducted under the court’s direct supervision and to contrast it with voluntary winding up. |
| In re Phoenix Oil and Transport Co Ltd (No 2) | English High Court Chancery Division | Yes | [1958] Ch 565 | England and Wales | Cited to explain that in a voluntary winding up, the court's role recedes from being in more direct control of the supervision and conduct of the liquidation process. |
| BNP Paribas v Jurong Shipyard Pte Ltd | Court of Appeal | Yes | [2009] 2 SLR(R) 949 | Singapore | Cited for analogous reasoning about the use of the word “may” within the predecessor provisions found in ss 253 and 254 of the old Companies Act (Cap 50). |
| Petroships Investment Pte Ltd v Wealthplus Pte Ltd (in members’ voluntary liquidation) (Koh Brothers Building & Civil Engineering Contractor (Pte) Ltd and another, interveners) and another matter | High Court | Yes | [2018] 3 SLR 687 | Singapore | Cited to support the principle that in the case of a solvent company, a voluntary winding up would have been under the control of the members and not the creditors. |
| Metalform Asia Pte Ltd v Holland Leedon Pte Ltd | Court of Appeal | Yes | [2007] 2 SLR(R) 268 | Singapore | Cited for the principle that the court must ensure that its processes are not being abused to further a collateral purpose or ulterior motive. |
| Adcrop Pte Ltd v Gokul Vegetarian Restaurant and Cafe Pte Ltd (Rajeswary d/o Sinan and another, non-parties) | General Division of the High Court | Yes | [2023] 5 SLR 1435 | Singapore | Cited for the principle that the court must ensure that its processes are not being abused to further a collateral purpose or ulterior motive. |
| Zhejiang Crystal-Optech Co Ltd v Crystal-Moveon Technologies Pte Ltd (Moveon Technologies Pte Ltd and another, non-parties) | General Division of the High Court | Yes | [2024] 4 SLR 1736 | Singapore | Cited for the principle that the court must ensure that its processes are not being abused to further a collateral purpose or ulterior motive. |
| Re Castlewood Group Pte Ltd (in creditors’ voluntary liquidation) | General Division of the High Court | Yes | [2022] 5 SLR 741 | Singapore | Cited as an example of good faith litigation that the members believe to be likely to be instituted by a liquidator nominated by the creditors. |
| City & Suburban Pty Ltd and others v Smith (as liquidator of Conpac (Aust) Pty Ltd (in liq)) and another | Federal Court of Australia | Yes | (1998) 28 ACSR 328 | Australia | Cited as an example of a committee of inspection which may, in turn, affect the course or conduct of the liquidation process. |
| Re Bradford Investments Ltd | English High Court Chancery Division | Yes | [1991] BCLC 224 | England and Wales | Cited for the interpretation of a company's articles of association regarding voting rights of shareholders who have only partially paid up the share capital for their subscribed shares. |
| Sun Electric Power Pte Ltd v RCMA Asia Pte Ltd (formerly known as Tong Teik Pte Ltd) | Court of Appeal | Yes | [2021] 2 SLR 478 | Singapore | Cited for the principles for the test of a company being shown to be “unable to pay its debts” under s 254(2)(c) of the old CA (Cap 50). |
| Loh Cheng Lee Aaron and another v Hodlnaut Pte Ltd (Zhu Juntao and others, non-parties) | General Division of the High Court | Yes | [2024] 4 SLR 1683 | Singapore | Cited for the principle that the court adopts a commercial, rather than a technical, view of insolvency. |
| JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd (Group Lease Public Co Ltd and another, non-parties) | General Division of the High Court | Yes | [2024] SGHC 195 | Singapore | Cited for the principle that an applicant invoking s 125(2)(c) of the IRDA bears the burden of positively proving its inability to pay its debts on the “cash flow” insolvency test in Sun Electric without the benefit of any presumptions. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Companies Act 1967 | Singapore |
| Companies Act 1967 s 184(1) | Singapore |
| Insolvency, Restructuring and Dissolution Act 2018 s 125(1)(a) | Singapore |
| Insolvency, Restructuring and Dissolution Act 2018 s 125(1)(e) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Winding-up order
- Special resolution
- Insolvency
- Cash flow test
- Members’ resolution
- Directors’ resolution
- Paid-up capital
- Voting rights
- IRDA
- Companies Act
15.2 Keywords
- Winding up
- Insolvency
- Special resolution
- IRDA
- Companies Act
- Singapore
- Company Law
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Insolvency Law | 95 |
| Winding Up | 95 |
| Restructuring and Dissolution | 80 |
| Corporate Law | 60 |
16. Subjects
- Insolvency
- Corporate Law
- Winding Up
- Restructuring