DB International Trust (Singapore) Limited v Medora Xerxes Jamshid and another

DB International Trust (Singapore) Limited is trustee of secured bonds issued by Kirkham Finance Limited, a subsidiary of Kirkham International Pte Ltd (KIPL). The bonds were secured by, among other things, a pledge of KIPL's shares in PT Borneo Prima Coal Indonesia (BPCI), an Indonesian coal concession holder, which were KIPL's primary assets. KIPL was wound up on just and equitable grounds on 20 November 2020, and Mr Medora Xerxes Jamshid was appointed liquidator. After the bonds defaulted, the trustee claimed to be a creditor of KIPL and filed a proof of debt.

In January 2022 the liquidator learned that Mr Garry David Taylor, a former KIPL director, had taken steps in Indonesia on KIPL's behalf to nullify the share pledge, and he issued a broadly worded ratification of Mr Taylor's actions. Around the same time BPCI issued new shares, reducing KIPL's stake from 95% to 28.5%; the liquidator said he learned of this only through this application. He had engaged KPMG to investigate KIPL's affairs, and had refused to call a creditors' meeting on the basis that no proofs of debt had been admitted. In Originating Application No 707 of 2022 the trustee applied to remove him and appoint two Quantuma liquidators, or alternatively to compel a creditors' meeting.

1. What test governs removal of a court-appointed liquidator for cause under s 139(1) of the Insolvency, Restructuring and Dissolution Act 2018.
2. Whether the liquidator failed to show sufficient vigour, in ratifying Mr Taylor's actions and in relying on the KPMG investigation.
3. Who is a creditor entitled to request a meeting under s 150(1), and whether the liquidator should have admitted the trustee's proof for the limited purpose of voting.
4. Whether there was a conflict of interest or a justifiable loss of creditor confidence.

Drawing on Petroships Investment Pte Ltd v Wealthplus Pte Ltd [2018] 3 SLR 687, the judge framed a two-stage test: identify the purposes of the liquidation, then ask whether removal is in the real, substantial and honest interest of the liquidation. In an insolvent liquidation the creditors' wishes carry predominant weight. A liquidator need not be at fault to be removed.

The ratification was framed far wider than needed for the nullification proceedings, and the liquidator did not check the status of KIPL's main asset before giving it, despite an enquiry about control of BPCI. This failure plausibly caused loss through the share dilution. He also left the KPMG investigation running for over a year without updates, did not explain its scope to interested parties, and never asked the trustee about its proof.

A creditor under s 150(1) is a person with a debt provable in the winding up, not only one whose proof has been admitted; otherwise a liquidator could delay a meeting indefinitely. The trustee's proof was provable. Taking a wrong but arguable view of the law was not itself cause for removal, but refusing, years in, to admit the proof for voting under r 101(1) of the Rules was unjustified. Failing to seek approval for appointing solicitors was not material, and the funding agreement needed no approval.

No conflict of interest arose, as no breach of duty was alleged. But creditors with claims of about US$37,332,157, out of about US$38,982,069 claimed, supported removal, and their loss of confidence was justified by the other findings. Nothing weighed against removal.

Goh Yihan JC allowed the trustee's primary prayer, removed Mr Medora as liquidator and appointed Mr Luke Anthony Furler and Ms Ellyn Tan Huixian as joint and several liquidators. The liquidator's Summons No 583 of 2023 was moot, and no order was made on it. The judge declined to order the liquidator to pay costs personally, stressing that removal did not rest on any finding of impropriety.