Tay Lak Khoon v Tan Wei Cheong (as Judicial Manager of USP Group Limited) and others

USP Group Limited was placed under judicial management on 11 June 2024, with Mr Tan Wei Cheong and Mr Lim Loo Khoon as judicial managers. Mr Tay Lak Khoon, a creditor owed about $394,500, objected before and after a creditors' meeting in September 2024 that several entities voting on the statement of proposals were related to, or not independent of, the company, and that their votes should be disregarded. Without those votes the resolution approving the restructuring plan would have failed for want of a majority in number. The judicial managers, acting on their solicitors' advice, counted the votes. They also refused to let the proxies of two law firms vote because their proxy form or proof of debt was filed late.

In HC/OA 1024/2024 Mr Tay sought orders that the votes be disregarded, a declaration that the resolution was not validly passed, and removal of the judicial managers. The Judge held the votes should have been disregarded and that the resolution was not validly passed, but declined to remove the judicial managers, finding an honest error, and made no order as to costs. Mr Tay appealed in Civil Appeal No 74 of 2024 against the refusal to remove them and the costs orders, and applied in CA/SUM 9/2025 to admit fresh evidence. The judicial managers did not cross-appeal.

1. What the test is for removing a judicial manager for cause under s 104(1) of the Insolvency, Restructuring and Dissolution Act 2018
2. Whether the judicial managers' counting of the disputed votes and refusal of the late proxies gave rise to a reasonable apprehension of bias
3. Whether fresh evidence should be admitted and whether the costs orders below should be disturbed

The court held that due cause must be shown for removal, and that the single question is whether removal is in the real and substantial interest of the judicial management, by analogy with a court-appointed liquidator. It departed from the two-stage test in DB International Trust (Singapore) Ltd v Medora Xerxes Jamshid [2023] 5 SLR 773: the purposes of the appointment are part of that single inquiry, the word honest adds nothing, and the court's discretion is exercised in weighing the factors, not afterwards. Apparent bias is judged by a fair-minded and informed observer, and a creditor's subjective belief is not relevant to that question, though it may matter to a claimed loss of confidence.

Applying the principles in Turf Club Auto and Foo Kian Beng, an officeholder may reasonably rely on professional advice that appears competent. Mr Tay's counsel accepted that the law on disregarding related party votes on a statement of proposals was unsettled, so reliance on the solicitors' advice was reasonable, and any error would be no more than an honest mistake. The late filings justified refusing the two proxies, and the creditors' letters relied on the same invalid reasons.

The fresh evidence, about a later director appointment unrelated to the vote, sought to run a new case and was irrelevant. Each side had won one of the two central issues below, so no order on costs was justified.

The court also expressed provisional reservations about the Judge's view on the votes: unlike a scheme of arrangement, a statement of proposals does not cram down creditors' rights, the regulations do not exclude related creditors, and the judicial manager controls the company. It left the point open.

The Court of Appeal dismissed the appeal and the application to adduce fresh evidence, and awarded the judicial managers costs of $75,000 inclusive of disbursements for the appeal and the summons, leaving the costs orders below undisturbed.