Affert Resources Pte Ltd v Industries Chimiques: Insolvency Law, Undervalue Transactions & Waiver of Debt

In Affert Resources Pte Ltd (in compulsory winding up) v Industries Chimiques du Senegal and another, the General Division of the High Court of Singapore heard an application by Affert Resources Pte Ltd to unwind a transaction at an undervalue, namely, a waiver of a debt of US$17,007,263.60 due from Industries Chimiques du Senegal to Affert. The court dismissed the application, finding that while the waiver was a transaction at an undervalue, it was not appropriate to order Industries Chimiques du Senegal and/or Indorama Holdings BV to pay the debt to Affert.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Application dismissed.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case regarding whether a waiver of debt is a transaction at an undervalue under insolvency law. Application dismissed.

1.7 Decision Date

27 February 2024

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Affert Resources Pte Ltd (in court compulsory winding up)	Applicant	Corporation	Application dismissed	Lost	Petrina Tan Heng Kiat of Bih Li & Lee LLP Darrell Low Kim Boon of Bih Li & Lee LLP Wong Soon Peng Adrian of Rajah & Tann Singapore LLP Sia Bao Huei of Rajah & Tann Singapore LLP Ang Leong Hao of Rajah & Tann Singapore LLP
Industries Chimiques du Senegal	Respondent	Corporation	Application dismissed	Won	Bull Cavinder SC of Drew & Napier LLC Kong Man Er of Drew & Napier LLC Tan Sih Si of Drew & Napier LLC
Indorama Holdings BV	Respondent	Corporation	Application dismissed	Won	Bull Cavinder SC of Drew & Napier LLC Kong Man Er of Drew & Napier LLC Tan Sih Si of Drew & Napier LLC

3. Judges

Judge Name	Title	Delivered Judgment
Goh Yihan	Judge	Yes

4. Counsels

Counsel Name	Organization
Petrina Tan Heng Kiat	Bih Li & Lee LLP
Darrell Low Kim Boon	Bih Li & Lee LLP
Wong Soon Peng Adrian	Rajah & Tann Singapore LLP
Sia Bao Huei	Rajah & Tann Singapore LLP
Ang Leong Hao	Rajah & Tann Singapore LLP
Bull Cavinder SC	Drew & Napier LLC
Kong Man Er	Drew & Napier LLC
Tan Sih Si	Drew & Napier LLC

4. Facts

Affert supplied sulphur to ICS between May 2012 and June 2013 for US$22,298,264.60.
ICS owed Affert US$17,007,263.60 for the sulphur supplied.
ICS, Affert and Senfer were part of the Archean Group of Companies.
In 2014, ICS faced financial difficulties with a negative net value of about US$137m.
IHBV bought 66% of the shares in ICS from Senfer for US$50m on 20 August 2014.
As part of the acquisition, IHBV agreed to cause ICS to pay US$9m to Senfer to settle related party outstandings.
Affert sent a letter to ICS on 7 October 2014 confirming it would not claim US$17,277,886.
IHBV proceeded with the acquisition based on the understanding that ICS's dues to Affert were settled.
Affert was placed in creditors’ voluntary winding up on 8 February 2017 and compulsorily wound up on 18 September 2017.

5. Formal Citations

Affert Resources Pte Ltd (in compulsory winding up) v Industries Chimiques du Senegal and another, Originating Summons No 544 of 2019, [2024] SGHC 57

6. Timeline

Date	Event
2012-05-01	Affert supplied sulphur to ICS.
2013-06-01	Affert supplied sulphur to ICS.
2014-08-20	IHBV bought 66% of the shares in ICS from Senfer.
2014-10-07	Affert issued a letter to ICS confirming it would not claim US$17,277,886.
2015-03-26	IHBV completed payment of the purchase price for the Acquisition.
2015-03-24	Affert, ICS, and Transfert entered into a Deed of Termination.
2017-02-08	Affert was placed in creditors’ voluntary winding up.
2017-09-18	Affert was compulsorily wound up.
2018-07-18	Affert commenced Suit 724 against ICS.
2019-04-24	Affert filed the present application, HC/OS 544/2019.
2023-11-28	Judgment reserved.
2024-02-28	Judgment issued.

7. Legal Issues

Whether the 7 October Letter contains the alleged waiver
- Outcome: The court held that the alleged waiver is contained in the 7 October Letter.
- Category: Substantive
Whether the 7 October Letter constitutes a transaction
- Outcome: The court held that the 7 October Letter constitutes a transaction under s 98(1) of the Bankruptcy Act.
- Category: Substantive
- Related Cases:
  - [2003] 4 SLR(R) 667
  - [2005] 1 SLR(R) 154
Whether the 7 October Letter is a transaction at an undervalue
- Outcome: The court held that the 7 October Letter is a transaction at an undervalue.
- Category: Substantive
- Related Cases:
  - [2022] 2 SLR 158
Whether it would be appropriate to make a Payment Order against ICS and/or IHBV
- Outcome: The court held that it would not be appropriate to make the Payment Order sought by Affert for ICS and IHBV to, jointly and severally, pay to Affert the ICS Debt.
- Category: Procedural
- Related Cases:
  - [2004] 1 BCLC 217
  - [2005] 1 BCLC 295
  - [2019] 2 BCLC 215
  - [2009] EWHC 1753 (Ch)
  - [2023] EWHC 44 (Comm)
  - [2010] EWHC 24 (Ch)
  - [2008] Ch 357

8. Remedies Sought

Payment order for US$17,007,263.60

9. Cause of Actions

Avoidance of transactions at an undervalue

10. Practice Areas

Commercial Litigation
Insolvency Litigation

11. Industries

Chemicals
Fertilizers

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Recovery Vehicle 1 Pte Ltd v Industries Chimiques Du Senegal and another appeal and another matter	Court of Appeal	Yes	[2021] 1 SLR 342	Singapore	Cited for background facts regarding the Archean Group of Companies and the shareholding of ICS prior to 2014.
Rothstar Group Ltd v Leow Quek Shiong and other appeals	Court of Appeal	Yes	[2022] 2 SLR 158	Singapore	Cited for the elements that must be established to bring a case within section 98 of the Bankruptcy Act and for the principles relating to the comparison of value provided for under s 98(3)(c) of the Bankruptcy Act.
Mercator & Noordstar NV v Velstra Pte Ltd (in liquidation)	Court of Appeal	Yes	[2003] 4 SLR(R) 667	Singapore	Cited for the elements that must be established in order to bring a case within s 98 of the Bankruptcy Act and for the definition of 'transaction'.
Re Taylor Sinclair (Capital) Ltd (in liquidation); Knights v Seymour Pierce Ellis Ltd	English High Court	Yes	[2001] 2 BCLC 176	England	Cited for guidance on the meaning of 'transaction'.
Velstra Pte Ltd v Dexia Bank NV	Court of Appeal	Yes	[2005] 1 SLR(R) 154	Singapore	Cited for the meaning of the phrase 'entered into a transaction with any person' in s 98(1) of the Bankruptcy Act.
Sea-Land Service Inc v Cheong Fook Chee Vincent	Court of Appeal	Yes	[1994] 3 SLR(R) 250	Singapore	Cited for the principle that a practical benefit accruing to a contractual party can constitute consideration.
Williams v Roffey Bros & Nicholls (Contractors) Ltd	English Court of Appeal	Yes	[1991] 1 QB 1	England	Cited for the principle that a practical benefit accruing to a contractual party can constitute consideration.
S Pacific Resources Ltd v Tomolugen Holdings Ltd	High Court	Yes	[2016] 3 SLR 1049	Singapore	Cited for the principle that courts are ready to find the existence of consideration in the form of practical benefits.
Buildspeed Construction Pte Ltd (in liquidation) v Theme Corp Pte Ltd and another	High Court	Yes	[2000] 1 SLR(R) 287	Singapore	Cited for ascribing a range of values to the profit margin that the grantor had given up as a result of the impugned transaction.
Re Thoars (decd) (No 2); Reid v Ramlort Ltd (No 2)	English Court of Appeal	Yes	[2005] 1 BCLC 331	England	Cited for the principle that there is nothing in the express words of the provision which requires the court to ascribe a precise figure either to the outgoing value or to the incoming value.
Agricultural Mortgage Corporation plc v Woodward and another	English Court of Appeal	Yes	[1995] 1 BCLC 1	England	Cited for the principle that the court did not appear to have identified any numerical figure, or even a range, for the value accruing to the grantor.
Re MDA Investment Management Ltd; Whalley v Doney and another	English High Court	Yes	[2004] 1 BCLC 217	England	Cited for the principle that a court must simply restore the position to the status quo ante, without going further than that to reconstruct the position to what would have been.
Lord v Sinai Securities Ltd and others	English High Court	Yes	[2005] 1 BCLC 295	England	Cited for the principle that the court’s primary concern is the restoration of the company’s position.
Johnson v Arden and others	English High Court	Yes	[2019] 2 BCLC 215	England	Cited for the principle that the court is not bound to restore the position to exactly that which existed prior to the relevant transaction or preference.
In the matter of Oxford Pharmaceuticals Ltd Between: Wilson and another v Masters International (UK) Ltd and another	English High Court	Yes	[2009] EWHC 1753 (Ch)	England	Cited for the proposition that an order may only be made against a third-party defendant if the third party had “personally benefited in monetary terms … in some direct and tangible way”.
Integral Petroleum SA v Petrogat FZE and others	English High Court	Yes	[2023] EWHC 44 (Comm)	England	Cited for the principle that the court found that there were transfers defrauding creditors under s 423 of the UK Insolvency Act made to a company.
Ailyan v Smith	English High Court	Yes	[2010] EWHC 24 (Ch)	England	Cited for the principle that the court can make a payment order against a third-party defendant merely on the ground that that defendant has facilitated and procured an undervalue transaction.
Solvadis Commodity Chemicals GmbH v Affert Resources Pte Ltd	High Court	Yes	[2014] 1 SLR 174	Singapore	Cited for the evidence that the sulphur in the Solvadis Shipment was not actually sub-standard.
Singla v Brown and another	English High Court	Yes	[2008] Ch 357	England	Cited for the principle that the Court decided not to set the transaction aside, on the basis of the broader circumstances surrounding the transfer.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed)	Singapore
Bankruptcy Act (Cap 20, 2009 Rev Ed)	Singapore
Section 329 of the Companies Act (Cap. 50)	Singapore
Section 98 of the Bankruptcy Act (Cap. 20)	Singapore
Section 102(1)(d) of the Bankruptcy Act	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Transaction at an undervalue
Waiver
Insolvency
Liquidation
Payment order
Related party outstandings
Acquisition
Restorative order

15.2 Keywords

Insolvency law
Transaction at undervalue
Waiver of debt
Companies Act
Bankruptcy Act
Singapore High Court

17. Areas of Law

Area Name	Relevance Score
Insolvency Law	95
Transactions at an undervalue	85
Avoidance of transactions	80
Waiver	60
Company Law	40
Contract Law	30

16. Subjects

Insolvency
Transactions at an undervalue
Waiver of debt