Corporate Recovery (2) OVERVIEW Insolvency & Public Trustees Office There are 4 main divisions in the Insolvency & Public Trustees Office: Corporate Insolvency Division Individual Insolvency Division Trust Division Registry of Moneylenders & Pawnbrokers Corporate Insolvency Law Singapores corporate insolvency law is found mainly in the Companies Act. The Bankruptcy Act is relevant for some areas. (ie: right to set-off; avoidance of vulnerable transactions). As our Companies Act is modeled largely on UK and Australian companies legislation, case law from these jurisdiction have persuasive authority. The various processes in Singapores corporate insolvency regime are: A) Liquidation governed by the Companies Act (Part X), and the Companies (Winding-Up) Rules B) Judicial Management governed by the Companies Act (Part VIIIA, Sections 227A 227X) invariably leads to Winding Up C) Schemes of Arrangement governed by the Companies Act (Section 210) D) Receivership governed primarily by Common Law, and the Companies Act (Part VIII, Sections 217 - 227) debenture holder appoints receiver to recover assets LIQUIDATION/WINDING UP -

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(starting comp easy but process of winding up complex) Liquidation or Winding Up is the process by which a company is dissolved. In a liquidation, the companys business is closed down, its assets are sold off, the creditors are paid, the balance of the assets are distributed to the members (shareholders/ contributories) and, at the end of the whole process, the company ceases to exist upon dissolution o (Comp legal person) What Is Winding-Up Winding up is the process where all the companys assets are realised. Realisation proceeds are distributed among the companys creditors Any surplus proceeds are then distributed among the contributories of the company or otherwise as constitution directs RARE; usu wound up when not enough money to pay all the creditors Contributories rarely get anything back Purpose of winding p Ensure just distributn of assets Terminate comps existence b eventual dissolution Just distribution of assets Comp assets and affairs pass into hands of indep liquidator whose powers and duties are regulated by statute Rights of unsecured creditors against assets frozen on commencemtn of winding up; further deterioriation of comp financial position and proliferation of liab; ord liab discharged on pari passu basis Liquidator may recover some of adv received fr comp by creditor or another party at expense of other creditors Liquidator may investigate into comp affairs and conduct

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4. A) B) C) D) E) F) G)

Reasons for termination of comp Comp ceased Management deadlock Oppression shr dispute s216 Corporate or financial restructuring of grp to which comp belongs Minimise tax liab or maximize tax adv for grp to which comp belongs Breach of stt provns inckluding offences committed Comp acting outside scope of activities 2 Main types of Liquidation (more specifically, 3 types of liquidation) Compulsory or Court Liquidation court appts liquidator, liq takes over o (3) Compulsory/ Court ordered liquidation: 99.99% is where the coy is insolvent Voluntary Liquidation comp can vol palce itself in liq by wy of meeting of members etc o (1) Members voluntary: where coy is still solvent (over-riding criteria) VOLUNTARY: cos no one has to go to court, the directors can make a declaration of solvency + state the coy is able to pay all its liabilities within 12 months, and call a members and creditors meeting and then go into liquidation (2) Creditors voluntary: coy actually has to be insolvent when put into liquidation Voluntary Winding-Up (2 types) (i) Members Voluntary WP: S.294 CA Special resolution passed by company in general meeting. The company must be solvent & a declaration of solvency must have been made by the directors.Co must be solvent in a members WU Only private liquidators are appointed. Best used where comp able to pay debts within 12 mths after commencement of winding up Winding up commences at time of passing of resoln Compulsory Winding-Up (winding-up by court) S.253 CA deals with application for compulsory winding up: Under s253 comp itself, creditors, contrib, liquidator, judicial manager or minister may present application to HC for winding up of comp Requires an order by the Court Co is insolvent S.254 CA lists the grounds when company can be wound up by Court: Most important ground: S.254(1)(e) CA the company is unable to pay its debt. The company is insolvent. The Official Receiver or a private liquidator is appointed by the Court. In past, receiver the liquidator in all cases, but now, where speicalised company where large amt of specilaised business or unus complicated business, will advise creditors to aply for private liquidators eg where official receiver does not act there is dispute bet directors. OR normally x act where any sort of internal dispute. Commences at date of presentation of application

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(ii) Creditors Voluntary WP: S.296 CA Special resolution passed by company in general meeting. Company must hold creditors meeting; company is insolvent. Creditors choice of private liquidator will prevail.

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The principle of pari passu distribution applies in both Voluntary Winding-Up and Compulsory WindingUp. NB : Same principles of asset realisation & dividend distribution

Members Voluntary Winding Up

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The members of the company may pass a resolution that the company be wound up and also appoint a liquidator. This mode of winding up is best adopted where the company is able to pay its debts in full within 12 months after the commencement of winding up. Winding up commences at the time of passing of the resolution. When it is proposed to wind up the company voluntarily, the directors of the company is required under Section 293 CA to make a statutory declaration that they have formed the opinion that the company will be able to pay its debts in full within 12 months after the commencement of winding up.

Creditors Voluntary Winding Up If the company is not able to meet its liabilities, the company can convene a meeting of its creditors to consider its proposal for a voluntary winding up of the company. If a resolution is passed in favour of the winding up, the company will appoint a liquidator, subject to any preference the creditors may have as to choice of liquidators. Compulsory Winding Up Under Section 253 CA, the company itself, creditors, contributories, liquidator, judicial manager, or the Minister may present a petition to the High Court for the winding up of the company. The grounds to support a petition for compulsory winding up are found in Section 254. Compulsory Winding Up commences at the date of presentation of the petition S255.2 Differences - The difference between a voluntary liquidation and a compulsory liquidation lies in the manner in which the winding up is initiated. o To initiate a voluntary liquidation, a resolution of the members must be passed. o On the other hand, a compulsory liquidation is initiated by a petition to the court by a party with locus standi to do so. Who can apply for winding up: Section 253(1) CA: Provides for who may petition for winding up of a company: s 253 - Eligibility to be an applicant o company; creditor; contributory o NOT officers of the company ie director cannot wind up comp unless shr or creditor. s 254 - Grounds for WU o most common comp unable to pay debts: Application for winding up. 253. (1) A company, whether or not it is being wound up voluntarily, may be wound up under an order of the Court on the application (a) of the company; (b) of any creditor, including a contingent or prospective creditor, of the company; (c) of a contributory or any person who is the personal representative of a deceased contributory or the Official Assignee of the estate of a bankrupt contributory; (d) of the liquidator; (e) of the Minister pursuant to section 241 or on the ground specified in section 254 (1) (d) or (l); (f) of the judicial manager appointed pursuant to Part VIIIA; (g) in the case of a company which is carrying on or has carried on banking business, of the Minister charged with the responsibility for finance; or (h) of the Minister on the ground specified in section 254 (1) (m), or of any two or more of those parties. (2) Notwithstanding anything in subsection (1) (a) a person referred to in subsection (1) (c) may not make a winding up application on any of the grounds specified in section 254 (1) (a), (b), (c), (e) or (i), unless (i) the company has no member; or (ii) the shares in respect of which the contributory was a contributory or some of them were originally allotted to the contributory, or have been held by him and registered in his name for at least 6 months during the 18 months

before the making of the winding up application or have devolved on him through the death or bankruptcy of a former holder; (b) a winding up application shall not, if the ground of the application is default in lodging the statutory report or in holding the statutory meeting, be made by any person except a contributory or the Minister nor before the expiration of 14 days after the last day on which the meeting ought to have been held; (c) the Court shall not hear the winding up application if made by a contingent or prospective creditor until such security for costs has been given as the Court thinks reasonable and a prima facie case for winding up has been established to the satisfaction of the Court; and (d) the Court shall not, where a company is being wound up voluntarily, make a winding up order unless it is satisfied that the voluntary winding up cannot be continued with due regard to the interests of the creditors or contributories. COURT LIQUIDATION Upon appointment of liquidator Notices o Statement of affairs: For creditors voluntary and court ordered which is a statement of the coys assets and liabilities o Notice to regulatory bodies Letterheads

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to be stamped in liquidation so that the public at large must know that they are dealing with the coys liquidator

Preliminaries to Acceptance of Appointment - members: declaration of solvency liquidators consent to act o ensure that no conflict: e.g. Ernst & Young is auditor of A coy, and is also asked to act as liquidator of B coy, which is in liquidation and A coy is a creditor of coy B or vice versa, then this would be a situation of conflict have to ensure that meetings are in order and resolutions are passed (see the rules prescribed in the CA, e.g. require special resolution etc) To file notice of appointment with Registrar In the case of court appointed liquidators, security has to be given o In a court appointed situation, the liqudiator becomes an officer of the court, so that if the liquidator runs away, there is some security with the Official Assignee Circumstances in which company may be wound up by Court A winding up by the court is initiated by the presentation of a petition by a person who is entitled to do so. - A petition must state the grounds on which it is sought to wind up the company. A company may be wound up by the court on the grounds as stated in Section 254. The most common ground on which a petition is presented is usually on grounds of Insolvency or the companys inability to pay its debts. o comp may have assets but no cash -> unable to pay debvts

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S.254(1) CA: Provides for the exhaustive list of grounds on which the Court may make an order for the company to be wound up. The most common ground for winding-up is S.254(1)(e) the company is unable to pay it debts. S.254(2) CA: Provides the definition of inability to pay debts. There are 3 definitions: (a) Failure by the company to satisfy the statutory demand served by the creditor (note: this is the most commonly invoked provision) Demand served at cos registered address for sum of more than $10,000, left unsatisfied for more than 3 weeks (b) Execution issued on a judgment which has been partially or wholly unsatisfied. (c) When proved to the court that the company is unable to pay its debts.

(d) Just and equitable tt company be wound up but reasons must be set out clearly. If not financial reasons, usu court x look favourably on it. See Section 254(2) CA: Definition of inability to pay debts Compared with Bankruptcy Statutory Demand: o There is no need to follow a prescribed from for letter of demand unlike Bankruptcy proceedings.

Circumstances in which company may be wound up by Court. 254. (1) The Court may order the winding up if (a) the company has by special resolution resolved that it be wound up by the Court; (b) default is made by the company in lodging the statutory report or in holding the statutory meeting; (c) the company does not commence business within a year from its incorporation or suspends its business for a whole year; (d) the company has no member; (e) the company is unable to pay its debts; (f) the directors have acted in the affairs of the company in their own interests rather than in the interests of the members as a whole, or in any other manner whatever which appears to be unfair or unjust to other members; (g) an inspector appointed under Part IX has reported that he is of opinion (i) that the company cannot pay its debts and should be wound up; or (ii) that it is in the interests of the public or of the shareholders or of the creditors that the company should be wound up; (h) when the period, if any, fixed for the duration of the company by the memorandum or articles expires or the event, if any, happens on the occurrence of which the memorandum or articles provide that the company is to be dissolved; (i) the Court is of opinion that it is just and equitable that the company be wound up; (j) the company has held a licence under any written law relating to banking, and that licence has been revoked or has expired and has not been renewed; (k) the company has carried on banking business in Singapore in contravention of the provisions of any written law relating to banking; (l) the company has carried on multi-level marketing or pyramid selling in contravention of any written law that prohibits multi-level marketing or pyramid selling; or (m) the company is being used for an unlawful purpose or for purposes prejudicial to public peace, welfare or good order in Singapore or against national security or interest. Definition of inability to pay debts. (2) A company shall be deemed to be unable to pay its debts if (a) a creditor by assignment or otherwise to whom the company is indebted in a sum exceeding $10,000 then due has served on the company by leaving at the registered office a demand under his hand or under the hand of his agent thereunto lawfully authorised requiring the company to pay the sum so due, and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; (b) execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or (c) it is proved to the satisfaction of the Court that the company is unable to pay its debts; and in determining whether a company is unable to pay its debts the Court shall take into account the contingent and prospective liabilities of the company. (3) For the purpose of subsection (1) (m), a certificate issued by the Minister charged with the responsibility for internal security stating that he is satisfied that the company referred to in the certificate is being used for purposes against national security or interest shall be conclusive evidence that the company is being used for such purposes. (4) Upon the making of an application by the Minister under section 253 (1) (h) for the winding up of a company under subsection (1) (m) on the ground that it is being used for purposes against national security or interest, the Court, upon the application of the Minister, may, pending the hearing of the winding up application or the making of a winding up order, make (a) an order restraining the company or its directors, manager, officers or employees from doing any act or from carrying out any activity as may be specified in the order; and (b) such other interim orders as the Court thinks fit.

(5) Any person who acts in contravention of an order made by the Court under subsection (4) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 2 years or to both. Re Dayang Construction & Engineering Pte Ltd [2002] 3 SLR 379 Demand did not refer to the 3-week period or any warning of WU if left unsatisfied. Belinda Ang JC (as she then was) held that it is not necessary for a demand to refer to the period of three weeks within which the debtor company is to make payment, and that such a demand would be valid even if it stipulated some shorter period for payment. The three-week period is relevant only for determining whether the companys non-compliance with the demand has given rise to the presumption of insolvency, and is not required to be stated in the demand itself. Ang JC also held that it is not necessary for a demand to contain a warning that the company may be wound up if it fails to comply with the demand, or state that the company has, apart from payment, the options of securing or compounding the debt to the reasonable satisfaction of the creditor. - In considering the form in which a demand was expressed, one ought to bear in mind that ultimately the court had the discretion whether to wind up the company. In this regard, the learned judicial commissioner noted that, in the instant case, it was not suggested that the company had been misled by the statutory demand. - As long as the demand has met all the statutory requirements in S.254(2) in substance, the statutory presumption applies. Re Management Recruiters International (Asia) Pte Ltd [2002] 4 SLR 561 Quantum of debt disputed. Execution issued on a judgement partially or wholly unsatisfied Just and equitable that co be wound up Court dismissed petition - No evidence to show debt meets the statutory limit for presumption to operate. The debt on which a winding up petition was founded must be unambiguous and clearly above the statutory sum of $10,000. The petition should be dismissed where the debt did not obviously exceed $10,000. The court was satisfied that the dispute as to the debt was genuine and plausible. First, the without prejudice correspondence, if admissible (which in the first place was not), showed that some debt was due which amount could not be determined without a trial. Second, the company had a valid counterclaim against MRI. Therefore, no obvious debt above $10,000 The WU petition was dismissed rather than stayed. What is the test for insolvency? There are 2 tests for insolvency: Cash-flow test of insolvency when the company cannot meet its obligations/ debts as and when they fall due. easiesr to prove. Grd more commonly used. (b) Balance-sheet test of insolvency when the current liabilities of the company exceed its assets. must show tt assets not large enough to cove current liab not popular because i. must balance assets and valuation can differ greatly ii. fact tt current liab exceeds assets may not mean tt current insolvent and not workable may have devpt in pipeline making it profitable

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See Section 254(2) CA provides for a deeming provision for when a company is considered to be unable to pay its debts.

Section 254(2) CA: Definition of inability to pay debts A company shall be deemed to be unable to pay its debts if (a) a creditor by assignment or otherwise to whom the company is indebted in a sum exceeding $10,000 then due has served on the company by leaving at the registered office a demand under his hand or under the hand of his agent thereunto lawfully authorized requiring the company to pay the sum so due, and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor;

(b) (c)

execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or it is proved to the satisfaction of the court that the company is unable to pay its debts; and in determining whether a company is unable to pay its debts the Court shall take into account the contingent and prospective liabilities of the company. Under Section 254(2), o if execution or other process issued on a judgment, decree or order is returned unsatisfied in whole or in part, and the company is unable to pay its debts, then the company is deemed to be insolvent. o If a creditor is owed more than S$ 10,000, he may serve a statutory demand on the company at its registered office requiring payment of the sum due. If the company has not paid or secured or compounded the claim within 21 days, it is presumed to be insolvent and the creditor is entitled to present a petition to wind up the company.

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Presumption of Insolvency A company is deemed Insolvent when o it is unable to pay debts as and when they fall due o when it has an excess of total liabilities over total assets. (even contingent liab are included) - The insolvency of a company may be established in either manner. It is on the onus of the petitioner to prove to the satisfaction of the court that the company is unable to pay its debts (or insolvent by virtue of total liab over total assets). In determining whether a company is insolvent, the court will take into account the contingent and prospective liabilities of the company. o Eg if comp has contracts, petition for winding up, terminated => possib of contingent liab may be calc into total liab VOLUNTARY LIQUIDATION Procedures on Appointment - A voluntary liquidation is usually proposed by the companys directors. - If the directors file a declaration of solvency with the Accounting and Corporate Regulatory Authority (ACRA) in accordance with Section 293, the winding up will proceed as a members voluntary liquidation. o Ie they declre tt in their opinion, cam able to pay debts tt all due in next 12 mths - If they do not, then the winding up will be deemed as a creditors voluntary liquidation. o Then liq must call for meeting of crediors to convert members liq into creditor liq Declaration of Solvency - The declaration of solvency is a written declaration to the effect that the directors have made an inquiry into the affairs of the company and have formed the opinion that the company will be able to pay its debts in full within 12 months after the commencement of the winding up. Difference - The main difference between a members and a creditors voluntary liquidation, is that in a members voluntary liquidation, the company is solvent (Company has excess of assets over liabilities and is able to pay its debts as and when they fall due). Who can be a liquidator? Two persons can act as a liquidator under the Companies Act: (e) The Official Receiver the default liquidator S.263 CA clearly states that the Official Receiver, by virtue of his office, is the default liquidator when no liquidator has been appointed or when the liquidator has vacated his post.

Appointment, style, etc., of liquidators. 263. The following provisions with respect to liquidators shall have effect on a winding up order being made: (a) if an approved liquidator, other than the Official Receiver, is not appointed to be the liquidator of the company, the Official Receiver shall by virtue of his office become the provisional liquidator and shall continue to act as such until he or another person becomes liquidator and is capable of acting as such; (b) if there is no liquidator appointed, the Official Receiver shall summon separate meetings of the creditors and contributories of the company for the purpose of determining whether or not an application is to be made to the Court for appointing a liquidator in the place of the Official Receiver; (c) the Court may make any appointment and order required to give effect to any such determination, and, if there is a difference between the determinations of the meetings of the creditors and contributories in respect of the matter aforesaid, the Court shall decide the difference and make such order thereon as the Court may think fit; (d) in a case where a liquidator is not appointed by the Court, the Official Receiver shall be the liquidator of the company; (da) in a case where a winding up order is made under section 254 (1) (m) on the ground that the company is being used for purposes against national security or interest, the Official Receiver shall be the liquidator of the company; (e) the Official Receiver shall by virtue of his office be the liquidator during any vacancy; (f) any vacancy in the office of a liquidator appointed by the Court may be filled by the Court; (g) a liquidator shall be described, where a person other than the Official Receiver is liquidator, by the style of the liquidator, and, where the Official Receiver is liquidator, by the style of the Official Receiver and liquidator, of the particular company in respect of which he is appointed, and not by his individual name. Role Of The Official Receiver (a) Liquidator in compulsory winding-up (b) Amicus curiae (Assist Court) at winding-up proceedings and any matters involving winding-up of companies (c) Institutes civil or criminal proceedings ( esp where there is prosecution & disqualification) o Apart fr prosecution of dirs/officers who fail to file SOA, delinquent dirs and officers of comp in liqn can also be held liable for rang of offences s336 for offences committed prior to and subseq to commencement in winding up including Falsification of bks s338; failure to keep proper accts s339 and fraudulent trading s340 o Delinquent officers can also be made pereosnally liable in damages for misfeasance or breach of trust against comp s341 on appictn of liqr incl OR to court for assessment of damagesagainst guilty officers and court may also direct tt prosecution be instituted for any crim liab on part of officers found liable s342 o Investigation of such offences wld be handled by police with assistance of OR (d) Supervise private liquidators- if complaint by third party. When pricate liquidator finishes ujob, will send copuy of liquidatin report to OR to get clearance. Once get clearance, then less likelihood of objections to release of private liquidator. (e) Representative of defunct and dissolved companies where comp has been wound up and dissolved, there may still be assets coming in. (f) Reviews corporate insolvency law consultation exercises done fr time to time (g) Administers winding-up of unincorporated entities (ie: trade unions, societies, mutual benefit organizations) societies and MBO most likely to be wound up.

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An approved Liquidator (as defined in S.2 CA) S.2 CA defines an approved liquidator as an approved company auditor who has been approved by the Minister under s. 9 CA as a liquidator and whose approval has not been revoked. Note: A liquidator is an Officer of the Court and subject to supervision of the High Court, the Official Receiver and a Committee of Inspection (if any). i. Comprises reps of creditors if get creditor to agree on certain actions usu on same terms Any person approved by the Minister can be Approved Liquidator Approved company auditors Can seek directions from the court

Powers of a Liquidator Section 272

S.272 CA lists some of the powers of a liquidator. The powers of the liquidator include: (a) Power to investigate into affairs of company & conduct of company officers (b) Carry on the business of the company so far as is necessary for the beneficial winding up of the company. dangerous course of action unless company has available assets to pay expenses; May need approval for longer periods (c) (Subject to S.328 CA on preferential creditors) pay any class of creditors in full. (d) Make any compromise or arrangement with creditors (e) Power to access records, books (f) Appoint a solicitor to assist him in his duties (g) Bring and defend any actions in the companys name ie Institute or continue legal proceedings (h) Have access to investigate into the affairs of the company & conduct of company officers (i) Disclaim onerous contracts (which are not beneficial to the company pursuant to Section 332 CA. (j) Set aside transactions pursuant to Sections 98 103 BA read with Section 329 CA (k) Do all such other things as are necessary for winding up the affairs of the company and distributing its assets (l) Others: i. Take control of assets of the company ii. Sell the assets of the company and distribute the proceeds (surplus) to the contributories iii. Execute documents and deeds on behalf of the company including the use of the common seal iv. Appoint an agent to do any business which the liquidator is unable to do himself 1. eg valuers v. Pay creditors what is owed to them (but subject to s328 CA) vi. Power to sell assets vii. Power to act on behalf of the coy viii. Raise funds by charging assets ix. Appointing of agents x. Authorize directors for certain acts Powers of liquidator. 272. (1) The liquidator may with the authority either of the Court or of the committee of inspection (a) carry on the business of the company so far as is necessary for the beneficial winding up thereof, but the authority shall not be necessary to so carry on the business during the 4 weeks next after the date of the winding up order; (b) subject to section 328 pay any class of creditors in full; (c) make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging themselves to have any claim present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered liable; (d) compromise any calls and liabilities to calls, debts and liabilities capable of resulting in debts and any claims present or future, certain or contingent, ascertained or sounding only in damages subsisting, or supposed to subsist, between the company and a contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or the winding up of the company, on such terms as are agreed, and take any security for the discharge of any such call, debt, liability or claim, and give a complete discharge in respect thereof; and (e) appoint a solicitor to assist him in his duties. (2) The liquidator may (a) bring or defend any action or other legal proceeding in the name and on behalf of the company; (b) compromise any debt due to the company, other than calls and liabilities for calls and other than a debt where the amount claimed by the company to be due to it exceeds $1,500; (c) sell the immovable and movable property and things in action of the company by public auction, public tender or private contract with power to transfer the whole thereof to any person or company or to sell the same in parcels; (d) do all acts and execute in the name and on behalf of the company all deeds, receipts and other documents and for that purpose use when necessary the companys seal; (e) prove, rank and claim in the bankruptcy of any contributory or debtor for any balance against his estate, and receive dividends in the bankruptcy in respect of that balance as a separate debt due from the bankrupt, and rateably with the other separate creditors; (f) draw, accept, make and indorse any bill of exchange or promissory note in the name and on behalf of the company with the same effect with respect to the liability of the company as if the bill or note had been drawn, accepted, made or indorsed by or on behalf of the company in the course of its business; (g) raise on the security of the assets of the company any money required;

(h) take out letters of administration of the estate of any deceased contributory or debtor, and do any other act necessary for obtaining payment of any money due from a contributory or debtor or his estate which cannot be conveniently done in the name of the company, and in all such cases the money due shall for the purposes of enabling the liquidator to take out the letters of administration or recover the money be deemed due to the liquidator himself; (i) appoint an agent to do any business which the liquidator is unable to do himself; and (j) do all such other things as are necessary for winding up the affairs of the company and distributing its assets. (3) The exercise by the liquidator of the powers conferred by this section shall be subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers. Disclaimer of onerous property. 332. (1) Where any part of the property of a company consists of (a) any estate or interest in land which is burdened with onerous covenants; (b) shares in corporations; (c) unprofitable contracts; or (d) any other property that is unsaleable, or not readily saleable, by reason of its binding the possessor thereof to the performance of any onerous act, or to the payment of any sum of money, the liquidator of the company, notwithstanding that he has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation thereto, may, with the leave of the Court or the committee of inspection and, subject to this section, by writing signed by him, at any time within 12 months after the commencement of the winding up or such extended period as is allowed by the Court, disclaim the property; but where any such property has not come to the knowledge of the liquidator within one month after the commencement of the winding up, the power of disclaiming may be exercised at any time within 12 months after he has become aware thereof or such extended period as is allowed by the Court. (2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest and liabilities of the company and the property of the company in or in respect of the property disclaimed, but shall not, except so far as is necessary for the purpose of releasing the company and the property of the company from liability, affect the rights or liabilities of any other person. (3) The Court or the committee before or on granting leave to disclaim may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the Court or committee thinks just. (4) The liquidator shall not be entitled to disclaim if an application in writing has been made to him by any person interested in the property requiring him to decide whether he will or will not disclaim, and the liquidator has not, within a period of 28 days after the receipt of the application or such further period as is allowed by the Court or the committee, given notice to the applicant that he intends to apply to the Court or the committee for leave to disclaim, and, in the case of a contract, if the liquidator after such an application in writing does not within that period or further period disclaim the contract the liquidator shall be deemed to have adopted it. (5) The Court may, on the application of a person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the Court thinks just, and any damages payable under the order to that person may be proved by him as a debt in the winding up. (6) The Court may, on the application of a person who either claims any interest in any disclaimed property or is under any liability not discharged by this Act in respect of any disclaimed property and on hearing such persons as it thinks fit, make an order for the vesting of the property in or the delivery of the property to any person entitled thereto, or to whom it seems just that the property should be delivered by way of compensation for such liability as aforesaid, or a trustee for him, and on such terms as the Court thinks just, and on any such vesting order being made and a copy thereof and an office copy thereof being lodged with the Registrar and the Official Receiver, respectively, and if the order relates to land with the appropriate authority concerned with the recording or registration of dealings in that land, as the case requires, the property comprised therein shall vest accordingly in the person therein named in that behalf without any further conveyance, transfer or assignment. (7) Notwithstanding anything in subsection (6), where the property disclaimed is of a leasehold nature, the Court shall not make a vesting order in favour of any person claiming under the company, whether as under-lessee or as mortgagee, except upon the terms of making that person (a) subject to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property at the commencement of the winding up; or (b) if the Court thinks fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date,

and in either event, if the case so requires, as if the lease had comprised only the property comprised in the vesting order, and any under-lessee or mortgagee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property, and, if there is no person claiming under the company who is willing to accept an order upon such terms, the Court may vest the estate and interest of the company in the property in any person liable personally or in a representative character and either alone or jointly with the company to perform the lessees covenants in the lease, freed and discharged from all estates, incumbrances and interests created therein by the company. (8) Any person injured by the operation of a disclaimer under this section shall be deemed to be a creditor of the company to the amount of the injury, and may accordingly prove the amount as a debt in the winding up. Provisional Liquidators 2 instances (1) Creditors voluntary winding up: at the meeting of the creditors winding up, they can appoint a liquidator there and then however, they can also appoint a provisional liquidator as of the date of the declaration of insolvency cos they want to ensure that they will not be made liable for any acts which may run foul of the BA or CA so that at the creditors meeting, the creditors can decide whether to accept or reject the provisional liquidator so appointed (2) Court appointed provisional liquidator Whether liquidator are appointed under either one, the provisional liquidator has powers of liquidators School of thought Provisional liquidator is only that? o Saying that they are only to maintain status quo and preserve assets without dealing with the coys assets o Should wait for the confirmation of the creditors before taking any steps Role arises in three ways o As liquidator May be ordered as liqr of cpmp wound up compulsorily Req tt Statemen of affairs be filed promp,tly S270 CA made out and verified in prescribe form and manner and submitted to OR Realization of assets consisting of Cash in hand and in banks and other financial institn notice of winding up transmitted immed after winding up order to inform banks of ORs apptment Sale of office fittings and properties pwned by comp Call of npaid capital Collection of bk debts Recovery of monies fr o Dispositions made by comp aftercommencement og winding up void unless ordered otherwise b court s259 *overseas union finance court validated payments made to depositers after preseantatin of winding up application as depositors were secured creditors under s41 Finance Companies Act; sn does not affect third parties o undue prefence of creditors law of bankruptcy wld apply except that in case of winding up, commencement date is date of presenationgo application onus of proing fraudulent pref is on liqwuiator o sales ade to dirs by comp within period of 2 yrs before commencement of winding up bk debts once SOF filed by OR, action to recover bk debts OR not laible to incur any expenses iro winding up unless suff available assets For insolv comp, creditors meeting is convened fo get consent to pursue claim and meet expense of pusuing claim Sale of assets by OR

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If comp has assets, OR may sell them by auction, public tender or private contract Doen in ma,e and on behalf of comp and comp seal used if nec Observations Once SOA filed, OR will submit prelim report to all creditors in SOA for their info and invite them to prov info on comp affairs See below on proof of debt, distribn and dissolutoin As liquidator where receiver and manager is appted under debenture In ts case OR wqaits until receiver and maager has realized all assets Then surrenders acct bks belonging to comp to OR Reaisation of assets RM will consult oR on sale price to avoid future examination of sale by OR RM acctable to OR for all assets Secured creditors will deal with OR wrt their securities RM T comply wi Private liquidation Private liqrs are officers of the court and subj to supervision of committee of inspection, high court etc Once SOA submitted to him, private liqr has to odge copy of it with OR and registrar of companies If pricate liqr resigns OR steps in as liqr s263 CA Before he can proceed with winding up comp, to deposit sufficient security to be determined by OR before capable of acting as liqr s264 CA Security usu fixed by acctant in ORs office based on financial statements furnished by private liqr Private iqr also to file 6 mthly accts of receipts and payments in course of liqn with OR s317 CA OR may at any time req liqr to ans queries in relation to winding up or if OR of view tt he has not done duties faitfully OR may apply to court to examine him on oath concerning winding up s265 CA Where no committee of inspection, OR may on aplicatn of private lkiqr to any thing or give directn or permission authorized under the act or reqd to be given by committee s314 CA After payment of creditors or making of final distribn, private liqr shall pay any monies or unclaimed assets in his hand or under his control, to OR to be placed in Companies Liquidation Acct s322 CA All applications mde to court by private liqr to be served on OR

Appeal Appeal against decision of liquidator. 315. Any person aggrieved by any act or decision of the liquidator may apply to the Court which may confirm, reverse or modify the act or decision complained of and make such order as it thinks just. Try not to go into private proseucitn inform receiver abt what has happened they have power to prosecute officers partrly when they have not filed statement of affairs

General statistics TOTAL ACTIVE CASES AS AT 31 AUGUST 2006 Total Cases = 1,301 Official Receiver 901 69.3% Pte Liquidator 400 30.7% Note tt when comp has a lot of money, more likely to have pte liq VALUE OF ASSETS REALISED : JAN - AUG 2006 $1,6M has been realised from:

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book debts shares/bonds real estate rentals furniture stocks plant & equipment cars deposits & cash in hand/at bank successful suits

DIVIDENDS DECLARED BETWEEN JAN TO AUG 2006 $3.1 Million was paid out to 353 creditors - small sum compared to the sums claimed by creditors Procedures for winding-up of companies PROCESS OF ADMINISTRATION (9 steps) Winding up order -> Filing of Statement of Affairs (to be done quickly after winding up order here directors if find it slow or difficult to file SOF, may have two reasons: 1. may have to go into comp docs to provide clear pic 2. hiding sth those advising liquidators to take nte., if dirs giving excuss, this may mean tt hiding sth) -> Investigations -> Realization of assets -> Adjudication of Claims -> Declaration of Dividends -> Return of Capital to contributories (usually rare, nt even money to pay creditors much less shrs) -> release of liquidator -> Dissolution of company

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The Companies (Winding Up) Rules govern the procedures for winding-up of companies under the Companies Act Winding up application o Registered business address of co o State ground for winding-up usu when comp unable to pay debts

Form of winding up application 22. (1) Every application for the winding up of a company by the Court shall be made by originating summons. (2) The application for the winding up of a company shall be (a) in Form 2 set out in the First Schedule if it is made by the company itself; and (b) in Form 3 set out in the First Schedule if it is made by a person other than the company. (3) Where an application to wind up the company is made by a person other than the company, that person shall be referred to in Form 3 set out in the First Schedule and all proceedings as the plaintiff. Filing of winding up application 23. (1) A winding up application shall be filed at the office of the Registrar who shall appoint the time and place at which the winding up application is to be heard. (2) Notice of the time and place appointed for hearing the winding up application shall be written on the winding up application and sealed copies thereof, and the Registrar may at any time before the winding up application has been advertised, alter the time appointed and fix another time.

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Affidavit fr officer of company supporting application o AVP affidavit verifying petition (this is the same as affid supporting petition)

Affidavit supporting application for winding up 25. (1) Every application for the winding up of a company by the Court shall be supported by an affidavit. (2) The affidavit supporting an application to wind up a company shall state (a) the date of incorporation of the company; (b) the registered office of the company; and (c) the grounds on which the application for winding up is made.

(3) The affidavit supporting a winding up application shall be in Form 5 set out in the First Schedule and shall be made by the applicant or by one of the applicants, if more than one, or, in the case where the application is made by a corporation, by some director, manager, secretary or other principal officer thereof and shall be filed and served together with the winding up application, and such affidavit shall be prima facie evidence of the statements therein.

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Affidavit of Service Company & OR o proced for service must be carried out properly o must show tt comp has notice of winding up

Mode of service 18. Except as otherwise provided by the Act, these Rules or any order (a) all notices, summonses and other documents except those of which personal service is required, shall be deemed to be sufficiently served if left at or sent by prepaid post to the last known address of the person to be served therewith or to the address (if any) at which such person has authorised service on him to be effected; and the notice, summons or document if so sent by prepaid post shall be considered as served at the time that the same ought to be delivered in the ordinary course of post by the post office, and notwithstanding the same may be returned by the post office; (b) no service shall be deemed invalid by reason that the name, or any of the names other than the surname of the person to be served, has been omitted from the document containing the person's name if the Court is satisfied that in other respects the service of the document has been sufficient; and (c) when the solicitor for a party to be served accepts service of a document on behalf of that party and indorses the original or a copy thereof to that effect, that service shall be deemed sufficient. Service of winding up application and supporting affidavit 26. (1) Every winding up application and supporting affidavit shall, unless filed by the company, be served upon the company at the registered office of the company, and if there is no registered office, then at the principal or last known principal place of business of the company, if any can be found, by leaving a copy with any member, officer or employee of the company there, or in case no such member, officer or employee can be found there, then by leaving a copy at such registered office or principal place of business, or by serving it on such member or members of the company as the Court may direct; and where the company is being wound up voluntarily, the winding up application and supporting affidavit shall also be served upon the liquidator (if any) appointed for the purpose of winding up the affairs of the company. The affidavit of service of the winding up application and supporting affidavit may be in Form 6 or Form 7 set out in the First Schedule. (2) Where a winding up application is filed by any person other than the liquidator of the company in relation to a company which is in the course of being wound up, the winding up application and supporting affidavit shall be personally served upon the liquidator. (3) A copy of the winding up application and supporting affidavit shall also be served upon the Official Receiver. Copy of winding up application and supporting affidavit to be furnished to creditor or contributory 27. Every contributory or creditor of the company shall be entitled to be furnished by the applicant or his solicitor with a copy of the winding up application and supporting affidavit within 48 hours after requiring the same, upon payment of 50 cents per folio of 100 words for such copy.

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Advertisement in 1 English & 1 Chinese local daily newspaper & in Govt Gazette o 7 clear days

Publication in the Gazette 19. Except as otherwise provided by the Act, these Rules or any order (a) all matters which require to be gazetted shall be published once in the Gazette; (b) all matters which require to be advertised shall be published once in a local newspaper; (c) all matters required to be gazetted subsequent to a winding up order shall be gazetted by the liquidator; (d) where any winding up order is amended or any matter which has been gazetted has been amended or altered or where any matter was wrongly or inaccurately gazetted or advertised the order or matter shall be re-gazetted or re-advertised with the necessary amendments and alterations. Advertisement of winding up application 24. Every winding up application shall be advertised 7 clear days (or such longer time as the Court may direct) before the hearing, in Form 4 set out in the First Schedule as follows: (a) once in the Gazette and once at least in one English and one Chinese local daily newspaper or in such other newspapers as the Court may direct; and

(b) the advertisement shall state the day on which the winding up application was filed and the name and address of the applicant and of his solicitor and contain a note at the foot thereof, stating that any person who intends to appear on the hearing of the winding up application, either to oppose or support, must send notice of such intention to the applicant or to his solicitor, within the time and in the manner prescribed by rule 28, and an advertisement of an application for the winding up of a company by the Court which does not contain such a note shall be deemed irregular, and if the applicant or his solicitor does not within the time hereby prescribed or within such extended time as the Registrar may allow duly advertise the winding up application in the manner prescribed by this rule, the appointment of the time and place at which the winding up application is to be heard shall be cancelled by the Registrar and the winding up application shall be removed from the file unless the Judge or the Registrar shall otherwise direct.

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Memorandum of Advertisement o stating tt have advertised in such newspaper and attach copies of adverts

Memorandum of advertisements to be filed 20. Unless otherwise expressly provided in the Act, these Rules or unless otherwise expressly ordered, where any matter is gazetted or advertised in connection with any proceedings under the Act or under these Rules (a) a memorandum as in Form 70 set out in the First Schedule referring to and giving the date of the Gazette or advertisement, signed by the person responsible for the publication in the Gazette or newspaper or his solicitor shall be filed (i) if the advertisement relates to proceedings for or in connection with a winding up by the Court, by the liquidator; or (ii) in any other case, by the party responsible for publishing the advertisement; (b) in the case of an advertisement for or in connection with a winding up by the Court, a copy of the newspaper or Gazette in which the advertisement appeared shall be delivered to the Official Receiver and a copy to the liquidator by the party responsible for publishing the advertisement; and (c) such a memorandum shall be prima facie evidence that the advertisement to which it refers was published in the Gazette or in the issue of the newspaper mentioned in it.

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Registrars Memorandum Winding Up deposit of $4,400 to OR for purposes of admin Consent of liquidator of company li takes a lto of resp and may become liable for breach of duties so need to consents to what he is being informed of before comp being wound up.

Approved liquidator to be nominated 31. (1) When filing the winding up application, the applicant may nominate in writing an approved liquidator who may be appointed liquidator if an order for the winding up of the company is made by the Court. Consent of liquidator (2) Before the hearing of the winding up application, the applicant or his solicitor shall obtain and file the consent in writing of the approved liquidator nominated.

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Notice of Intention to Appear on Petition

Notice of intention to appear 28. (1) Every person who intends to appear on the hearing of a winding up application shall serve on the applicant or his solicitor notice of his intention. The notice shall be signed by such person or by his solicitor and shall give the address of the person signing it and shall be served, or if sent by post shall be posted in such time as in the ordinary course of post to reach the address not later than 12 o'clock noon of the day previous to the day appointed for the hearing of the winding up application. (2) The notice may be in Form 8 set out in the First Schedule with such variations as circumstances may require. (3) A person who has failed to comply with this rule shall not, without special leave of the Court, be allowed to appear at the hearing of the winding up application.

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List of Parties attending eg supporting creditors usually.

Attendance on Registrar 32. (1) After a winding up application has been filed, the applicant or his solicitor shall on a day to be appointed by the Registrar attend before the Registrar and satisfy him that (a) the winding up application has been duly published in the Gazette and advertised; (b) the affidavit supporting the winding up application and the affidavit of service, if any, have been duly filed; (c) the consent in writing of the approved liquidator nominated by the applicant has been obtained and filed; (d) the provisions of these Rules as to winding up applications have been duly complied with; and (e) a sum of $4,400 has been deposited with the Official Receiver to cover the fees and expenses to be incurred by the approved liquidator or the Official Receiver, as the case may be, and any goods and services tax chargeable under the Goods and Services Tax Act (Cap. 117A) on the supply of services to which those fees or expenses relate. This deposit shall be refunded to the applicant by the liquidator before he takes any action under section 328 of the Act. (2) No order, except an order for the dismissal or adjournment of the winding up application, shall be made on the application of any person making the winding up application who has not, prior to the hearing of the winding up application, attended before the Registrar at the time appointed and satisfied him in the manner required by this rule.

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Substitution of applicant

Substitution of any person as applicant 33. (1) When an applicant is not entitled to make a winding up application or, whether so entitled or not, where he (a) fails to take all the steps prescribed by these Rules preliminary to the hearing of the winding up application; (b) consents to withdraw his winding up application or to allow it to be dismissed or the hearing to be adjourned; or (c) fails to appear in support of his winding up application when it is called on in Court on the day originally fixed for the hearing thereof or on any day to which the hearing has been adjourned or if appearing does not apply for an order in terms of the prayer of his winding up application, the Court may, upon such terms as it thinks just, substitute as applicant any person who, in the opinion of the Court, would have a right to make the winding up application and who is desirous of proceeding with the winding up application. (2) An order to substitute an applicant may, where an applicant fails to advertise his winding up application within the time prescribed by or under these Rules or consents to withdraw his winding up application, be made by the Registrar or the Court at any time before the date fixed for the hearing of the winding up application.

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OR = liquidator for WU company used for purposes against national security

Effects of Liquidation (All Types) (for Creditors vol liqn) - Sequence directors meeting first/ shrs meeting/ decide to choose liquidator/ then creditors meeting/ choice to accept shrs choice of liquidator or have one of their own - In court liq and creditors liqn their choice of liquidator DATE OF COMMENCEMENT (determines the clawback period of transaction values, etc) Time of presentation of the WU application - s 255(2) Co Act o Retrospective effect = transactions entered into after WU application made but before WU order will be affected o ie if winding up application is entered into at end of may 2006 and winding up order made aug, transactions may be bet end may and august they may be made void. Those who enter transactions may have to pay back moneys or proceeds. Time of passing resolution of the company (for voluntary WU) or the appointment of a provisional liquidator o essential for purposes of claw back transactions

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Once the Court approves a liquidation, the day of commencement is on the day the petition was presented. In a members voluntary liquidation, the day of commencement is on the day the company passes a special resolution to approve the winding up. For vol it is the day on which resolutions are passed Determining the time of commencement of winding up is very important. It is the relevant date for which provisions in the Companies Act refer to. For example: the date of commencement of winding up is relevant as the claw-back date for the avoidance of transactions entered into at an undervalue and unfair preferences. Date of Commencement of Winding Up (defined in Section 255 CA) Voluntary Winding Up Compulsory Winding Up

At the time of passing of the resolution for voluntary winding up by the company.

At the time of presentation of the winding up petition.

Commencement of winding up. 255. (1) Where before the making of a winding up application a resolution has been passed by the company for voluntary winding up, the winding up of the company shall be deemed to have commenced at the time of the passing of the resolution, and, unless the Court on proof of fraud or mistake thinks fit otherwise to direct, all proceedings taken in the voluntary winding up shall be deemed to have been validly taken. (2) In any other case the winding up shall be deemed to have commenced at the time of the making of the application for the winding up. Notification that the company is in liquidation o Once a winding up commences, every invoice, order for goods or business letter issued by the company must have the words In Liquidation added after the name of the company to serve as a warning to all those who deal with the company.

EFFECT OF WINDING UP ON COYS PROPERTY & LEGAL PROCEEDINGS rights of creditors, contributories and third parties affected *re lines bros Ltd 1983 brightman LJ commented tt liqudation of insolvent comp is process of collective enforcement of debts for benefit of general body of creditors; not process of exeuciton because not for benefit of one partr creditor but akin to execution because purpose is to enfore on pari passu basis payment of admitted or proved debts of comp when comp goes into liquidation, process is initiated which for all creditors is similar to process initiated for 1 creditor by execution A) Stay of legal proceedings against WU co (whether to commence or continue) except with leave of Court - s262(3) o after commencement of a winding up, no action or proceeding may be commenced against the company or proceeded with except with the leave of the court and upon such terms as the court may impose. o if it is a court winding up, then all proceedings are stayed o in a voluntary winding up, proceedings are not stayed, they are stayed only on application of the liquidator

Section 262(3) CA: Actions stayed on winding up order (3) When a winding up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company except (a) by leave of the Court; and (b) in accordance with such terms as the Court imposes Power to stay or restrain proceedings against company. 258. At any time after the making of a winding up application and before a winding up order has been made, the company or any creditor or contributory may, where any action or proceeding against the company is pending,

apply to the Court to stay or restrain further proceedings in the action or proceeding, and the Court may stay or restrain the proceedings accordingly on such terms as it thinks fit.

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Rationale for leave o *re Toronto wood and sihngle 1894 intention of legis wrt insolvency is to get within control of court all esate of insolv coimp, settle claims of debt, privilege, mortgage, lien etc in simkplest and lease expensive way and distrib assets among creditos in most expeditious manner p0ossible and not have proceedgs of winding up court or distribn assets delayed or impeded by or dependent on outsid or expensive litigation in other courts o to avoid unseemly scramble by creidotr to achvie priority at last mmt - *Roberts petroleum v Bernard Kenny 1983 writ served on comp without leave after winding up order is null *Wilson v banner scaffolding 1982 court will consider convenience and expediency in deciding whether to give leave to commence or cont proceedings o prvent escalation of costs o prevent dissipation of assets o prevent delay or impediment to liquidation

Korea Asset Management Corp v Daewoo Singapore Pte Ltd [2004] 1 SLR 671 o Facts o This was an application by Korea Asset Management Corp (the applicants) for leave to initiate compulsory winding up proceedings of Daewoo Singapore Pte Ltd (the company) while the company was already in the process of a voluntary winding up. The applicants were the majority creditors in the company. o On 26 May 2003, the companys directors initiated a creditors voluntary winding up. On the same day, without prior consultation with creditors, the companys directors appointed three provisional liquidators. A notice was issued to convene a shareholders and a creditors meeting on 23 June 2003. The applicants requested a postponement of the meeting, as they were still evaluating their options. The liquidators did not object to the postponement. The applicants also wrote to the liquidators regarding perceived conflicts of interest. o The shareholders meeting was conducted on 23 June 2003 and the companys sole shareholder resolved for the company to be wound up, nominating the provisional liquidators for the position of liquidators. The liquidators held the creditors meeting on the same day despite having earlier agreed to the applicants request for postponement. At the creditors meeting, the chairman declared that the meeting would lapse, as it was not convened at a time and place convenient to the majority in value of the creditors. No resolutions were voted on during this lapsed meeting. The applicants then became concerned and viewed the position taken by the company, the liquidators and their advisors as an attempt to dilute and undermine their rights. Additionally, the applicants had engaged a Korean based accounting firm (Anjin) to conduct a due diligence exercise on the company. In the report prepared by Anjin (Anjins report), Anjin opined that the companys insolvency appeared to be inextricably linked to its relationship with related entities. Anjins report also indicated that debts had been incurred in dubious circumstances which hinted at mismanagement, and suggested fraud on the part of the directors and officers of the company. o The applicants then sought leave to initiate compulsory winding up proceedings, despite the fact that the company was already in the process of being voluntarily wound up. In their application, they voiced their concerns over the state of the companys affairs and pointed to the need for an enquiry into the reasons for the companys insolvency and the apparent lack of independence on the part of the liquidators. The company and the liquidators objected to the application. In particular, the company was concerned about the additional costs incurred through the possible appointment of new liquidators should the compulsory winding up proceedings be initiated. o Held, allowing the application: o While convenience and the saving of costs were factors that would be taken into consideration, fair play and commercial morality were of paramount importance. In the circumstances, the companys contention that additional costs would be incurred by the initiation of winding up proceedings was unsupported. Further, in this case, a court appointed liquidator in a compulsory liquidation, as an officer of the court, might have better served the interests of the creditors: at [42], [56] and [60]. o In cases where a voluntary winding up had already commenced, the court would carefully scrutinise any application for a compulsory winding up to ensure that a party was not seeking to avail itself of a benefit

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that would not otherwise be available to it through the conventional winding up procedure. Another consideration would be whether such an application, if successful, would prejudice the claims of other legitimate creditors in a manner that could negate the statutory scheme of pari passu treatment for all unsecured creditors: at [48]. If the claim or right that an applicant was pursuing could be adequately dealt with within the insolvency regime, the court would not be inclined to grant leave to proceed. A good reason for refusing leave would exist in cases where the companys resources were threadbare and considerable costs would be incurred if leave were granted: at [50]. In cases where there had been an allegation of impropriety in relation to the cause of a companys insolvency, the liquidators role took on the added dimension of an investigator, on top of his administrative function as a collector of assets. Such a liquidator should not be perceived as having any relationship with the companys officers or shareholders. In such a case, the public interest element may sometimes tip the scales in favour of allowing a compulsory winding up: at [54]. The Anjin report necessitated further enquiry into the circumstances leading to the demise of the company. In this respect, the liquidators had not given sufficient responses explaining away the intricate transactions between the company and related entities: at [61]. Liquidators should always view matters objectively. When concerns are raised and liquidators are challenged on an issue involving an existing or potential conflict, they should pause and carefully review their position dispassionately. It was surprising that the liquidators strenuously opposed the application. The liquidators should not have been involved in this issue and doubt had been cast on their objectivity: at [70] and [72]. [Qbservation: The main focus of a company and its liquidators once winding up had commenced should be to prevent the fragmentation of its assets and to ensure that the interests of its creditors were protected to the fullest extent. In other words, returns to legitimate creditors should be maximised; the process of collecting assets and returning them to legitimate creditors should be attended to with all practicable speed. Unnecessary costs should not be incurred; liquidators should act in the collective interests of all legitimate stakeholders and not with a view to enhancing their own self-interests or fees. It stands to reason that those who had the greatest financial interest in the assets of the company should usually be allowed the biggest say. Corporate democracy is seldom a quantitative exercise.]

Jumabhoy Rafiq v Scotts Investment (Singapore) Pte Ltd [2003] 2 SLR 422 Retrospective leave - Scotts Investments (Singapore) Pte Ltd (in compulsory liquidation) (SIS) commenced a suit against Rafiq Jumabhoy (RJ). RJ counterclaimed and filed an application for summary judgment on the counterclaim. After the hearing date for summary judgment was fixed, SIS claimed that RJ had not obtained leave of court to commence and continue with his counterclaim, as required under s 262(3) of the Companies Act (Cap 50, 1994 Rev Ed). RJ thus filed the present originating summons to apply for leave retrospectively to commence and continue the existing counterclaim. RJs application for summary judgment was adjourned, pending the outcome of this application for leave. By this time, there was a possibility that part of RJs claim might have become time-barred. The court considered two issues: first, whether RJ should be granted leave to commence his counterclaim; secondly, whether the court has jurisdiction to grant leave retrospectively. Held: Allowing the application for leave o While s 262(3) of the Companies Act (Cap 50) was intended to prevent the liquidators from being distracted and the assets of the company in liquidation being expended to respond to unnecessary actions, it could not have been the purpose of s 262(3) to allow liquidators, and other unsecured creditors, an unexpected windfall which would arise if the court did not have jurisdiction to grant retrospective leave and a plaintiff could not file a fresh action because of limitation defences. o The existence of the jurisdiction does not necessarily mean that the jurisdiction will be exercised in favour of all applicants. It is still for applicants to persuade the court why such leave should be granted, especially if retrospectively. The mere fact that time and costs have already been incurred will not necessarily be sufficient always to persuade the court to grant leave retrospectively.

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B) After the commencement of winding up, all dispositions of property, transfer of shares are void unless Court orders otherwise - s 259

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Section 259 provides that any disposal of property after the commencement of a winding up is void, unless the court otherwise orders. 2mths related parties 6 mths non related parties (going bsckward fr commencement) Once winding up commences, it is important that the assets of the company be preserved so as to enable a fair distribution to all the companys creditors. Section 259 CA seeks to achieve this by rending all dispositions of the companys property, after the commencement of the winding up, void. A lot of dirs are also guarantors so if compo goes under, creditors will go after dirs and they may be made iundiv bankrupt they will want to transfer assets quickly, this is why transfer of shares are void must take note. Share transactions just before winding up order or application may have underhand dealings,. *Re grays inn construction 1980 court shld not validate any transaction tt might result in one or more pre liquidaton creditors being paid in full at expense of other creditors in absenve of special circuymstances making suc course desirable in interests of creditors as body; court inclined to validate transaction which cld increase or has ncreased value of comp assets or which wld preserve or ha preserved value of comp assets fr hyarm which wld result fr comp business being paralysed eg dispoal of property for continuatin of business or in ord course of business wic may be benefical not ony to comp but unsecured creditors sales of assets at ful market value may be validated since does not involve dissipation of comp assets in tt value of assets not reduced disposition in good faith in ord course of business at time when parties unaware tt application presented may be validated by court unless grds for thining tt transaction might involve attempt to prefer disponee

Avoidance of dispositions of property, etc. 259. Any disposition of the property of the company, including things in action, and any transfer of shares or alteration in the status of the members of the company made after the commencement of the winding up by the Court shall unless the Court otherwise orders be void.

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C) The companys assets do not vest in the liquidator or the Official Receiver (c/f bankruptcy where the bankrupts assets vest in the OA) o The companys property does not vest in the liquidator unless there is a vesting Order, but the liquidator is empowered to take the property into his custody or within his control o Ie Control of assets - only the liquidator has control of the assets of the coy that is in liquidatihon o liquidator has power to deal with the assets of the coy, while the directors power to deal with the assets of the coy are gone

Custody and vesting of companys property. 269. (1) Where a winding up order has been made or a provisional liquidator has been appointed, the liquidator or provisional liquidator shall take into his custody or under his control all the property and things in action to which the company is or appears to be entitled. (2) The Court may, on the application of the liquidator, by order direct that all or any part of the property of whatever description belonging to the company or held by trustees on its behalf shall vest in the liquidator and thereupon the property to which the order relates shall vest accordingly and the liquidator may, after giving such indemnity, if any, as the Court directs, bring or defend any action or other legal proceeding which relates to that property or which it is necessary to bring or defend for the purpose of effectually winding up the company and recovering its property. (3) Where an order is made under this section, every liquidator of a company in relation to which the order is made shall lodge within 7 days of the making of the order (a) a copy of the order with the Registrar; and (b) where the order relates to land, an office copy of the order with the appropriate authority concerned with the registration or recording of dealings in that land, and every liquidator who makes default in complying with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2,000 and also to a default penalty. (4) No vesting order referred to in this section shall have any effect or operation in transferring or otherwise vesting land until an appropriate entry or memorandum thereof is made by or with the appropriate authority.

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s 323 Liquidator not to incur expenses in WU unless there are sufficient available assets o very impt. If have to advise lkiquidator who wants to sue for debts, if not enough money in liquidation acct get other creditors to chip in and prov money for lawsuit o be careful. If incur expenses for lawsuit and not successful, liq may be asked to pay shortfall personally

Expenses of winding up where assets insufficient. 323. (1) Unless expressly directed to do so by the Official Receiver, a liquidator shall not be liable to incur any expense in relation to the winding up of a company unless there are sufficient available assets. (2) The Official Receiver may, on the application of a creditor or a contributory, direct a liquidator to incur a particular expense on condition that the creditor or contributory indemnifies the liquidator in respect of the recovery of the amount expended and, if the Official Receiver so directs, gives such security to secure the amount of the indemnity as the Official Receiver thinks reasonable. SHARE TRANSFERS o without the liquidators consent, once the coy is in liquidation, there can be no transfer of shares o the reason is to fix the members of the coy, so that the liquidators will know who are liable for the liabilities of the coy EFFECT OF WINDING UP ON COMPANY OFFICERS Cessation of directors powers once a company is placed into liquidation, the board of directors is effectively functus officio. the powers of the directors ceases upon liquidation (commencenent), but the liquidator, may in writing authorize the directors to do certain acts in voluntary winding ups, the liquidator can seek the consent of creditors to give the directors the requisite authy to do certain acts e.g. construction coy, liquidators may require the directors to drive certain contracts to fruitation The power to run the company lie vested with the liquidator. His job is to wind up the companys business, realize the assets, pay off the creditors and return whatever is left over to the members. the liquidator has the same powers that the coy had prior to going into liquidation until the coy is eventually dissolved a) b) The company officers have no power to carry on business of the company. The liquidator takes over control of the company. if nt crim liability The company officers have a duty to cooperate with and assist the liquidator to disclose and surrender all companys property in their possession (including companys books and records). otherwise OR may prosecute them. Fined or imprisoned section 285-287 Court has power to issue warrant sof arrest against dir, former dir or contrib. if satsifeid tt he is abt to ascdond or remove or conceal any of property for avoiding examination

Power to summon persons connected with company. 285. (1) The Court may summon before it any officer of the company or person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or any person whom the Court considers capable of giving information concerning the promotion, formation, trade dealings, affairs or property of the company. (2) The Court may examine him on oath concerning the matters mentioned in subsection (1) either by word of mouth or on written interrogatories and may cause to be made a record of his answers, and any such record may be used in evidence in any legal proceedings against him. (3) The Court may require him to produce any books and papers in his custody or power relating to the company, but where he claims any lien on books or papers the production shall be without prejudice to that lien, and the Court shall have jurisdiction to determine all questions relating to that lien. (4) An examination under this section or section 286 may, if the Court so directs and subject to the Rules, be held before any District Judge named for the purpose by the Court, and the powers of the Court under this section and section 286 may be exercised by that Judge.

(5) If any person so summoned, after being tendered a reasonable sum for his expenses, refuses to come before the Court at the time appointed, not having a lawful excuse, made known to the Court at the time of its sitting and allowed by it, the Court may cause him to be apprehended and brought before the Court for examination. Power to order public examination of promoters, directors, etc. 286. (1) Where the liquidator has made a report under this Part stating that, in his opinion, a fraud has been committed or that any material fact has been concealed by any person in the promotion or formation of the company or by any officer in relation to the company since its formation or that any officer of the company has failed to act honestly or diligently or has been guilty of any impropriety or recklessness in relation to the affairs of the company, the Court may, after consideration of the report, direct that the person or officer, or any other person who was previously an officer of the company, including any banker, solicitor or auditor, or who is known or suspected to have in his possession any property of the company or is supposed to be indebted to the company or any person whom the Court considers capable of giving information concerning the promotion, formation, trade dealings, affairs or property of the company, shall attend before the Court on a day appointed and be publicly examined as to the promotion or formation or the conduct of the business of the company, or in the case of an officer or former officer as to his conduct and dealings as an officer thereof. (2) The liquidator and any creditor or contributory may take part in the examination either personally or by a solicitor. (3) The Court may put or allow to be put such questions to the person examined as the Court thinks fit. (4) The person examined shall be examined on oath and shall answer all such questions as the Court puts or allows to be put to him. (5) A person ordered to be examined under this section shall before his examination be furnished with a copy of the liquidators report. (6) Where a person directed to attend before the Court under subsection (1) applies to the Court to be exculpated from any charges made or suggested against him, the liquidator shall appear on the hearing of the application and call the attention of the Court to any matters which appear to him to be relevant and if the Court, after hearing any evidence given or witnesses called by the liquidator, grants the application the Court may allow the applicant such costs as the Court in its discretion thinks fit. (7) The record of the examination (a) may be used in evidence in any legal proceedings against the person examined; and (b) shall, at all reasonable times, be made available to any creditor or contributory for review at the court premises. (8) The Court may if it thinks fit adjourn the examination from time to time. Power to arrest absconding contributory, director or former director. 287. The Court, at any time before or after making a winding up order, on proof of probable cause for believing that a contributory or a director or former director of the company is about to leave Singapore or otherwise to abscond or to remove or conceal any of his property for the purpose of evading payment of calls or of avoiding examination respecting the affairs of the company, may cause the contributory, director or former director to be arrested and his books and papers and movable personal property to be seized and safely kept until such time as the Court orders.

c)

The company officers must file a Statement of Affairs within 14 days after the date of the winding up order or such other period as may be allowed by the OR, the court or the liquidator the Statement of Affairs is to provide the particulars of the companys assets, liabilities, creditors and book debtors. It is a criminal offence to file a false statement of affairs: Section 270 CA Criminal offence : fine up to 5000 /imprisonment for term up to 1 yr (section 270) In practice, usu punishment is fine for such offences,

Statement of companys affairs to be submitted to Official Receiver. 270. (1) There shall be made out and verified in the prescribed form and manner and submitted to the Official Receiver or the liquidator, as the case requires, a statement as to the affairs of the company as at the date of the winding up order showing (a) the particulars of its assets, debts and liabilities; (b) the names and addresses of its creditors; (c) the securities held by them respectively; (d) the dates when the securities were respectively given; and (e) such further information as is prescribed or as the Official Receiver or the liquidator requires.

(2) The statement shall be submitted by one or more of the persons who are, at the date of the winding up order, directors, and by the secretary of the company, or by such of the persons hereinafter mentioned as the Official Receiver or the liquidator, subject to the direction of the Court, requires, that is to say, persons (a) who are or have been officers of the company; (b) who have taken part in the formation of the company at any time within one year before the date of the winding up order; or (c) who are or have been within that period officers of or in the employment of a corporation which is, or within that period was, an officer of the company to which the statement relates. (3) The statement shall be submitted within 14 days after the date of the winding up order or within such extended time as the Official Receiver or the liquidator or the Court for special reasons specifies, and the Official Receiver or the liquidator shall within 7 days after its receipt cause a copy of the statement to be filed with the Court and lodged with the Registrar and, where the Official Receiver is not the liquidator, shall cause a copy to be lodged with the Official Receiver. (4) Any person making or concurring in making the statement required by this section may, subject to the rules, be allowed, and be paid, out of the assets of the company, such costs and expenses incurred in and about the preparation and making of the statement as the Official Receiver or the liquidator considers reasonable subject to an appeal to the Court. (5) Every person who, without reasonable excuse, makes default in complying with the requirements of this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months or to both and also to a default penalty. Note also: dirs/officers who fail to comply despite conviction will be liable for firther offence under section 408.1 Default penalties. 408. (1) Where a default penalty is provided in any section of this Act, any person who is convicted of an offence under this Act or who has been dealt with under section 409 (4) or (5) for an offence under this Act in relation to that section shall be guilty of a further offence under this Act if the offence continues after he is so convicted or after he has been so dealt with and liable to an additional penalty for each day during which the offence so continues of not more than the amount expressed in the section as the amount of the default penalty or, if an amount is not so expressed, of not more than $200. (2) Where any offence is committed by a person by reason of his failure to comply with any provision of this Act under which he is required or directed to do anything within a particular period, that offence, for the purposes of subsection (1), shall be deemed to continue so long as the thing so required or directed to be done by him remains undone, notwithstanding that such period has elapsed. (3) For the purposes of any provision of this Act which provides that an officer of a company or corporation who is in default is guilty of an offence under this Act or is liable to a penalty or punishment, the phrase officer who is in default or any like phrase means any officer of the company or corporation who knowingly and wilfully (a) is guilty of the offence; or (b) authorises or permits the commission of the offence. Winding up rules STATEMENT OF AFFAIRS Preparation of statement of affairs 41. (1) Every person who under section 270 of the Act has been required by the liquidator to submit and verify a statement as to the affairs of the company shall be furnished by the liquidator with a copy of Form 61 set out in the Second Schedule to the Companies Regulations (Rg 1). (2) The liquidator may from time to time hold personal interviews with every such person as is mentioned in section 270 (2) (a), (b) and (c) of the Act for the purpose of investigating the company's affairs and it shall be the duty of every such person to attend on the liquidator at such time and place as the liquidator may appoint and give the liquidator all information that he may require. Extension of time for submitting statement of affairs 42. When any person requires any extension of time for submitting the statement of affairs, he shall apply to the liquidator who may, if he thinks fit, give a written certificate extending the time, which certificate shall be filed and shall render an application to t