Ascentra Holdings, Inc (In Official Liquidation) & 2 Ors v SPGK PTE. LTD.
7 cases cited
(6 SG, 1 foreign)
Catchwords
Practice Areas
Counsel (12)
BlackOak LLC Firm Oon & Bazul LLP Firm Rajah & Tann Singapore LLP Firm Angela Phoon Yan Ling Counsel Appellant Balakrishnan Ashok Kumar Counsel Respondent Charlene Goh Kai Ning Counsel Respondent Han Guangyuan Keith Counsel Appellant Lee Eng Beng Counsel Appellant Loh Song-En Samuel Counsel Respondent Santhiya d/o Kulasakeran Counsel Appellant Stanley Tan Sing Yee Counsel Respondent Yeo En Fei Walter Counsel Appellant
Case Significance
Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte Ltd [2024] SGCA 2 was a Court of Appeal decision delivered on 25 January 2024 in Civil Appeal No 23 of 2022, with judgment reserved after a hearing on 15 November 2023. The coram comprised Sundaresh Menon CJ, who delivered the judgment of the court, Steven Chong JCA and Belinda Ang Saw Ean JCA. The appeal concerned cross-border insolvency and the recognition of foreign insolvency proceedings, specifically the recognition of foreign solvent liquidation proceedings.
In the underlying HC/OS 16/2022, the appellants sought an order recognising the Cayman Islands liquidation of the first appellant, Ascentra Holdings, Inc, as a "foreign main proceeding" within Art 2(f) of the Third Schedule to the Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed), referred to as the SG Model Law, Singapore's adapted enactment of the UNCITRAL Model Law on Cross-Border Insolvency. Rajah & Tann Singapore LLP and Oon & Bazul LLP acted for the appellants; BlackOak LLC acted for the respondent SPGK Pte Ltd.
Summary
SUPREME COURT OF SINGAPORE
25 January 2024
Case summary
Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte Ltd [2024] SGCA 2
Court of Appeal – Civil Appeal No 23 of 2022
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Decision of the Court of Appeal (delivered by Chief Justice Sundaresh Menon):
Outcome: The Court of Appeal, having earlier recognised the first appellant’s voluntary, solvent liquidation in the Cayman Islands as a “foreign main proceeding” in Singapore (the “Recognition Decision”), declined to impose the conditions sought by the respondent in relation to the Recognition Decision, save for the termination of an automatic moratorium accompanying the Recognition Decision.
Pertinent and significant points of the judgment
• The Court of Appeal held that the liquidation of the first appellant should not be regarded as a court-ordered winding up which entails an automatic stay on all legal proceedings against the company. Even if the liquidation of the first appellant were regarded as a court-ordered winding up, it was correct in principle to terminate any moratorium that was engaged as a result: at [17]-–[21].
• The Court of Appeal held that there was no necessity for a requirement that the liquidators of the first appellant seek the permission of the Singapore court before taking any action in relation to the examination of witnesses, taking of evidence or the delivery of information concerning the first appellant’s assets, affairs, rights, obligations or liabilities. The commencement of such actions was subject to sanction by the Grand Court of the Cayman Islands. Moreover, the Singapore court hearing the application for any such action would be capable of ensuring that only applications which are necessary to protect the interests of the first appellant or its creditors are allowed: at [23]-–[26].
Background to the appeal and the material facts
1 The respondent is a company incorporated in Singapore and a wholly-owned subsidiary of Shang Peng Gao Ke, Inc (“SPGK Cayman”). The appellants maintain that the first appellant, Ascentra Holdings, Inc (in official liquidation) (“Ascentra”), has potential claims against the respondent, SPGK Cayman and another company incorporated in Singapore, Scuderia Bianco Pte Ltd (“Scuderia Bianco”).
2 On 17 September 2021, the Grand Court of the Cayman Islands (the “Cayman Grand Court”) ordered, among other things, that: (a) Ascentra’s liquidation in the Cayman Islands (“Ascentra’s Cayman Liquidation”) be continued under the supervision of the Cayman Grand Court; and (b) the second and third appellants be appointed as the joint official liquidators of Ascentra (the “Liquidators”). On 23 September 2021, the Liquidators filed a certificate in the Cayman Grand Court stating their determination that Ascentra should be treated as solvent. The same was stated in a letter dated 14 October 2021 addressed to Ascentra’s shareholders.
3 In HC/OS 16/2022 (“OS 16”), the appellants sought, among other things, an order recognising Ascentra’s Cayman Liquidation in Singapore as a “foreign main proceeding” within the meaning of Art 2(f) of the Third Schedule to the Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed) (the “IRDA”). The Third Schedule to the IRDA (the “SG Model Law”) sets out Singapore’s adapted enactment of the Model Law on Cross-Border Insolvency developed by the United Nations Commission on International Trade Law. The appellants also asked for the Liquidators to be granted “like powers in relation to [Ascentra’s] property and assets (and any proceeds thereof) as are available to a liquidator under Singapore insolvency law” (the “Relief Prayer”). OS 16 was dismissed.
4 In Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte Ltd [2023] 2 SLR 421 (the “Recognition Decision”), the Court of Appeal allowed the appellants’ appeal and held that Ascentra’s Cayman Liquidation ought to be recognised as a foreign main proceeding in Singapore under Art 17 of the SG Model Law. The Court of Appeal also invited further submissions on whether the recognition of Ascentra’s Cayman Liquidation should be made subject to any conditions.
Decision on appeal
5 The following issues arose for the Court of Appeal’s determination:
a. whether the automatic stay and suspension in respect of the commencement of actions against Ascentra’s property that arises upon recognition under Art 20(1) of the SG Model Law (the “Automatic Moratorium”) should be terminated by the court pursuant to Art 20(6) of the SG Model Law;
b. whether the Liquidators should be required to seek the permission of the Singapore court before taking any action pursuant to the Relief Prayer in relation to the examination of witnesses, taking of evidence or the delivery of information concerning Ascentra’s assets, affairs, rights, obligations or liabilities (“Investigation Actions”); and
c. whether the court should tailor and impose protections similar to those prescribed by the United States Bankruptcy Court (the “US Bankruptcy Court”).
The Automatic Moratorium
6 The appellants’ argument that the Automatic Moratorium should be maintained because Ascentra’s Cayman Liquidation should be regarded as a court-ordered winding up, which entails an automatic stay on all legal proceedings against the company under Singapore law, was rejected. Ascentra’s Cayman Liquidation was commenced as a voluntary liquidation which, under Singapore law, does not attract the operation of the automatic moratorium that is engaged upon the court making a winding up order pursuant to s 133 of the IRDA. Ascentra’s Cayman Liquidation was only brought under the supervision of the Cayman Grand Court due to the failure of Ascentra’s directors to file a declaration of solvency, but the Liquidators have since filed a certificate in the Cayman Grand Court as to Ascentra’s solvency and have confirmed the same to Ascentra’s shareholders: at [17].
7 Even if Ascentra’s Cayman Liquidation were regarded as a court-ordered winding up, it would nonetheless be correct in principle to terminate any moratorium that was engaged as a result. The appellants did not argue or show that there is a risk of Ascentra’s creditors attempting to steal a march over one another, nor did the appellants provide any other reason why a moratorium would be necessary in the context of Ascentra’s Cayman Liquidation. In addition, none of the factors identified in the case law were engaged such as to justify preventing the commencement of legal proceedings against Ascentra in Singapore: at [18]–[21].
Permission to take Investigation Actions
8 There was no necessity for the imposition of a requirement that the Liquidators seek the permission of the Singapore court before taking any Investigation Actions. Pursuant to the Relief Prayer, the commencement of any action or proceeding by the Liquidators is subject to such proceeding being sanctioned by the Cayman Grand Court: at [23].
9 Moreover, should the Liquidators commence an Investigation Action, the Liquidators would have to satisfy the court hearing the application that the legal requirements for that application are satisfied. The respondent did not explain why it could not be left to the court hearing the application to determine whether the commencement of any particular Investigation Action would be necessary to protect Ascentra’s property or the interests of its creditors. The court determining any prospective Investigation Action taken out by the Liquidators can: (a) ensure that only applications which are necessary to protect Ascentra’s or its creditors’ interests are allowed; and (b) determine whether the specific Investigation Action commenced by the Liquidators would contravene or be inconsistent with the determinations of the Cayman Court: at [24]–[28].
Protections prescribed by the US Bankruptcy Court
10 The respondent did not explain why it cannot seek the imposition of protective measures similar to those prescribed by the US Bankruptcy Court (which pertain to the issuance of subpoenas), before the court hearing the Liquidators’ application for the issuance of a subpoena (if there should be one). The court hearing the Liquidators’ application for the issuance of a subpoena would be capable of determining whether the imposition of the protective measures sought by the respondent would be necessary to protect the interests of Ascentra and its creditors: at [31].
Conclusion
11 The Court of Appeal declined to impose the conditions sought by the respondent in respect of the recognition of Ascentra’s Cayman Liquidation as a foreign main proceeding in Singapore, save for the termination of the Automatic Moratorium. No further order was made as to costs: at [32]–[33].
This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.
What did Ascentra Holdings v SPGK Pte Ltd [2024] SGCA 2 concern?
[2024] SGCA 2 concerned cross-border insolvency and whether the Cayman Islands liquidation of Ascentra Holdings, Inc could be recognised in Singapore as a foreign main proceeding under Art 2(f) of the Third Schedule to the Insolvency, Restructuring and Dissolution Act 2018.
Who heard the appeal in Ascentra Holdings [2024] SGCA 2?
The Court of Appeal coram in [2024] SGCA 2 comprised Sundaresh Menon CJ, who delivered the judgment of the court, together with Steven Chong JCA and Belinda Ang Saw Ean JCA, with judgment reserved and delivered on 25 January 2024.
Statutes Cited
Insolvency, Restructuring and Dissolution Act
Cases on this Act →
Restructuring and Dissolution Act
Cases on this Act →
Cases Cited (7)
SG (1)
[2023] SGHC 82
SLR (5)
[2004] 1 SLR(R) 671 [2015] 3 SLR 665 [2021] 4 SLR 526 [2023] 2 SLR 421 [2023] 3 SLR 1604
UK (1)
[2010] EWHC 1299
Referenced in
Statutes interpreted in this judgment
Legal concepts & references
Judgment
Read the full judgment on the official Singapore Courts portal.
Read on eLitigationSource: eLitigation ([2024] SGCA 2)