BOB YAP CHENG GHEE & 2 Ors v ENVY ASSET MANAGEMENT PTE. LTD.

Facts

The applicants were the liquidators of three Envy companies: Envy Asset Management Pte Ltd (EAM), Envy Global Trading Pte Ltd and Envy Management Holdings Pte Ltd. On the facts as framed by the liquidators, EAM purported between around January 2016 and April 2020 to buy nickel from an Australian company at a discount and resell it at a profit, and investors paid money under Letters of Agreement for a share of that profit. After the Monetary Authority of Singapore placed EAM on its Investor Alert List on 19 March 2020, the purported trading moved to Envy Global Trading under Receivables Purchase Agreements open only to accredited investors. Investors who did not qualify reinvested their returns through third-party accredited investors, joint accounts or family members.

In March 2021 charges of cheating and fraudulent trading were brought against the companies' key person, Mr Ng Yu Zhi. The interim judicial managers reported that the nickel trading was non-existent and the supporting documents were forgeries, and winding up orders were made on 16 August 2021. The liquidators demanded repayment from investors who had withdrawn more than they put in, and one hundred of them responded that they had reinvested those sums through other accounts. In Companies Winding Up Nos 108, 109 and 110 of 2021, by Summonses Nos 1679, 1680 and 1681 of 2023, the liquidators sought directions under s 145(3) of the Insolvency, Restructuring and Dissolution Act 2018 allowing them to aggregate such payments to an investor and net them off against that investor's claims made through other accounts (the Proposed Consolidation), subject to the agreement of all relevant parties. The committee of inspection had approved it in principle.

Issues

1. Whether the liquidators could rely on s 145(3) of the Insolvency, Restructuring and Dissolution Act 2018 to seek these directions
2. Whether the court should grant the directions sought for the Proposed Consolidation

Holding

The High Court allowed the applications and granted the directions the liquidators sought, while making clear it expressed no view on any later compromise or arrangement resulting from the Proposed Consolidation.

Reasoning

With little local authority beyond discrete questions, the court drew on Australian decisions on identically worded provisions. Those cases show the power to give directions is used for guidance on law or principle and to protect a liquidator whose decision may be criticised or contested, especially where creditors' competing interests must be balanced, and that the provisions for court-ordered and voluntary winding up are read alike, widely and to advance the liquidation. The court held these principles should apply in Singapore. Because the applications raised potentially controversial issues of law and principle and the proposal might be attacked by opposing creditors, the liquidators could rely on s 145(3).

Whether the directions should be made was a separate question: the court had to be satisfied they were proper, reasonable and advantageous to the liquidation, looking at the liquidators' reasons and how the proposal was formed. It was satisfied on several grounds. The proposal did not favour one class of creditors in breach of the pari passu principle; it simply extended the running account approach the liquidators already applied to every investor, treating all money in and out referable to an investor as one account, so that each investor's true claim was revealed. It served the estate by allowing compromises with overwithdrawn investors without the time and cost of separate suits and by making adjudication more certain. The committee of inspection and a working group of 108 investors supported it and no creditor objected at the hearing. The summonses preserved ongoing proceedings. Approval of any eventual compromise under s 144 was not sought, so the court did not consider it.

From the judgment