Tay Lak Khoon v Tan Wei Cheong: Judicial Management, Discounting Creditors' Votes, Removal of Judicial Managers
In Tay Lak Khoon v Tan Wei Cheong, the High Court of Singapore addressed an application by Tay Lak Khoon, a creditor of USP Group Limited, challenging the actions of the judicial managers, Tan Wei Cheong and Lim Loo Khoon, in counting votes at a creditors’ meeting. The application sought to disregard votes from USP subsidiaries and Hinterland Group Pte Ltd, declare Resolution 1 invalid, and remove the judicial managers. The court allowed prayers 1 and 2 of the application and dismissed prayers 3, 4, and 5 of the application.
1. Case Overview
1.1 Court
General Division of the High Court of the Republic of Singapore1.2 Outcome
Prayers 1 and 2 of the application were allowed, and prayers 3, 4, and 5 were dismissed.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Challenge to judicial managers' vote counting and application for their removal. The court addressed discounting related party votes and manager removal.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Tay Lak Khoon | Applicant | Individual | Application Allowed in Part | Partial | |
| Tan Wei Cheong (as Judicial Manager of USP Group Limited) | Respondent | Individual | Application Dismissed in Part | Partial | |
| Lim Loo Khoon (as Judicial Manager of USP Group Limited) | Respondent | Individual | Application Dismissed in Part | Partial | |
| USP Group Limited (under judicial management) | Respondent | Corporation | Application Dismissed in Part | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Wong Li Kok, Alex JC | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- The applicant, Tay Lak Khoon, is a creditor of USP Group Limited.
- The first and second respondents are the judicial managers of USP.
- USP was placed into judicial management on 11 March 2024.
- A creditors’ meeting was held on 6 September 2024 to consider the statement of proposals.
- Resolution 1, for the approval of the Restructuring Plan, was passed at the Creditors’ Meeting.
- Hinterland Group Pte Ltd and five subsidiaries of USP voted in favor of Resolution 1.
- The applicant sought to disregard the votes of the USP Subsidiaries and HG.
5. Formal Citations
- Tay Lak Khoon v Tan Wei Cheong, Originating Application No 1024 of 2024, [2024] SGHC 312
6. Timeline
| Date | Event |
|---|---|
| Insolvency Restructuring and Dissolution Act 2018 enacted | |
| Companies Act 1967 enacted | |
| USP Group Limited placed into judicial management; Judicial Managers appointed | |
| Statement of proposals dated | |
| Creditors’ Meeting held | |
| Tay Lak Khoon’s first affidavit dated | |
| HC/ORC 1248/2024 dated | |
| Tan Wei Cheong’s 1st affidavit dated | |
| 1st and 2nd Respondents’ Written Submissions dated | |
| Applicant’s Written Submissions dated | |
| Hearing date | |
| Judgment date |
7. Legal Issues
- Discounting of creditors’ votes in a statement of proposal
- Outcome: The court agreed with the applicant that the votes of the USP Subsidiaries and HG should be discounted to zero.
- Category: Substantive
- Sub-Issues:
- Votes of related party creditors
- Independence of creditors
- Related Cases:
- [2012] 2 SLR 213
- [2017] 2 SLR 898
- [2001] 3 HKLRD 634
- Removal of judicial managers
- Outcome: The court did not find sufficient grounds for the removal of the Judicial Managers.
- Category: Substantive
- Sub-Issues:
- Loss of confidence in judicial managers
- Independence of judicial managers
- Related Cases:
- [2023] SGHC 83
- [2004] 1 SLR 671
8. Remedies Sought
- Order to disregard votes cast by USP Subsidiaries and HG
- Declaration that Resolution 1 was not validly passed
- Declaration that the judicial managers acted unfairly
- Removal of the judicial managers
- Appointment of new judicial managers
- Costs of the application
9. Cause of Actions
- Unfair prejudice to the interests of creditors
- Challenging the actions of judicial managers
10. Practice Areas
- Insolvency
- Restructuring
- Corporate Law
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Swiber Holdings Ltd | High Court | Yes | [2018] SGHC 211 | Singapore | Cited for the court's decision on how to count votes under the predecessor provisions of ss 107 and 108 of the IRDA. |
| The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and ors v TT International and another appeal | Court of Appeal | Yes | [2012] 2 SLR 213 | Singapore | Cited for the principle that votes of wholly owned subsidiaries should be discounted to zero as they are entirely controlled by their parent company. |
| SK Engineering & Construction Co Ltd v Conchubar Aromatics Ltd and anor Appeal | Court of Appeal | Yes | [2017] 2 SLR 898 | Singapore | Cited for outlining factors to establish a relationship between a creditor and a scheme company, including control by the scheme company and common directors. |
| Re Brightoil Petroleum (S’pore) Pte Ltd | High Court | Yes | [2022] 5 SLR 222 | Singapore | Cited as an example where no discount was applied to votes of related subsidiaries because they were in liquidation and under the control of independent liquidators. |
| UDL Argos Engineering & Heavy Industries Co Ltd v Li Qi Lin | Hong Kong Court of Final Appeal | Yes | [2001] 3 HKLRD 634 | Hong Kong | Cited for the principle that votes of those with personal or special interests in supporting proposals cannot be regarded as fairly representative of the class in question and may be disregarded. |
| Yihua Lifestyle Technology Co. Ltd and another v HTL International Holdings Pte Ltd and others | Court of Appeal | Yes | [2021] SGCA 87 | Singapore | Cited for the two-stage test applied to the predecessor provision of s 115(a) and (b) of the IRDA. |
| PT Bank Negara Indonesia (Persero) TBK, Singapore Branch v Farooq Ahmad Mann | High Court | Yes | [2023] SGHC 249 | Singapore | Cited for expanding on HTLI to state that the HTLI test should apply equally to s 115(b) of the IRDA. |
| Wong Joo Wan (in his capacity as judicial manager of Bravo Building Construction Pte Ltd (under judicial management)) v Bravo Building Construction Pte Ltd (under judicial management) | High Court | Yes | [2024] SGHC 127 | Singapore | Cited for the key purpose of a statement of proposals in a judicial management is to set out the proposed strategy for achieving one or more of the purposes of judicial management. |
| DB International Trust (Singapore) Ltd v Medora Xerxes Jamshid | High Court | Yes | [2023] SGHC 83 | Singapore | Cited for the sequential two-stage test for the removal of liquidators under s 139(1) of the IRDA. |
| Korea Asset Management Corp v Daewoo Singapore Pte Ltd (in liquidation) | High Court | Yes | [2004] 1 SLR 671 | Singapore | Cited for the principle that a liquidator should be independent and be perceived and seen to be independent by independent creditors and observers. |
13. Applicable Rules
| Rule Name |
|---|
| Insolvency (England and Wales) Rules 2016 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Insolvency Restructuring and Dissolution Act 2018 | Singapore |
| Companies Act 1967 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Judicial management
- Statement of proposals
- Creditors’ meeting
- Discounting of votes
- Related parties
- Restructuring Plan
- Insolvency Restructuring and Dissolution Act
- Removal of judicial managers
15.2 Keywords
- judicial management
- insolvency
- creditors
- voting
- restructuring
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Insolvency Law | 95 |
| Judicial Management | 90 |
| Restructuring and Dissolution | 80 |
| Commercial Disputes | 50 |
16. Subjects
- Insolvency Law
- Corporate Restructuring
- Judicial Management