ZIPMEX PTE. LTD.

Facts

Companies in the Zipmex Group, which runs a cryptocurrency trading platform accessed through the Zipmex App, applied to the High Court. Zipmex Asia Pte Ltd (the Singapore holding company), Zipmex Pte Ltd and Zipmex Australia Pty Ltd sought sanction of pre-packaged schemes of arrangement under s 71 of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) in Originating Applications No 250, 251 and 252 of 2023. They, with Zipmex Company Limited and PT Zipmex Exchange Indonesia, also sought extensions of the moratoria to allow post-sanction steps.

At an earlier hearing on 2 December 2022 the applicants raised the idea of an administrative convenience class, and the court said it was then premature to decide whether one could be created. In the vote, Zipmex Asia's creditors voted in one class, while the other two companies' creditors voted as Vendor Creditors and Customer Creditors, with overwhelming support. Within the Customer Creditors, an Administrative Convenience Class of 67,130 customers whose withheld assets were below US$5,000 was excluded from voting by default, unless they opted in, in return for the same benefits as other customer creditors.

Issues

1. Whether the court may approve an administrative convenience class of low value creditors whose approval of the schemes is deemed.
2. What the legal basis is for creating such a class in a pre-packaged scheme under s 71 IRDA.

Holding

Aedit Abdullah J allowed the applications, sanctioning the pre-packaged schemes including the use of the Administrative Convenience Class, and granting the extensions of the moratoria. The requirements of s 71 IRDA, including disclosure and the statutory majorities on proper classification, were met, and the class was a proper class whose deemed approval satisfied s 71(3)(d) IRDA.

Reasoning

The applicants relied on s 1122(b) of the US Bankruptcy Code and pre-Code American practice. The court found little in that material useful for Singapore, but it showed that some compromise of strict rights can be needed for workability: polling all of the roughly 70,000 creditors would not be feasible at reasonable time and cost.

The court must still ensure there is no undue prejudice. That is best met by a quid pro quo for the deemed consent, such as full payment, and here the class members could also vote if they wished, which further supported the absence of prejudice.

As to the source of the power, the judge doubted that the Rules of Court 2021 could be used, since class creation is a matter of substantive law. He instead grounded it in s 210(3AB) of the Companies Act 1967, which lets the court order otherwise as to the required majority, and read that into s 71 IRDA through the opening words of s 71(1).

From the judgment