Show Theatres v Shaw Theatres: Unfair Preference in Company Winding Up

In Show Theatres Pte Ltd (in liquidation) v Shaw Theatres Pte Ltd and Another, the Singapore Court of Appeal addressed whether payments made by Show Theatres (in liquidation) to Shaw Theatres Pte Ltd and Eng Wah Pte Ltd constituted unfair preference. The court allowed the appeal, holding that Shaw Theatres Pte Ltd and Eng Wah Pte Ltd were 'persons connected' with Show Theatres, thus the payments made within two years prior to liquidation were presumed to be unfair preference and recoverable by the liquidator.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The Court of Appeal held that payments made by Show Theatres to Shaw Theatres and Eng Wah Pte constituted unfair preference, as they were 'persons connected' to Show Theatres.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Show Theatres Pte Ltd (in liquidation)AppellantCorporationAppeal AllowedWon
Shaw Theatres Pte LtdRespondentCorporationAppeal AllowedLost
Eng Wah Pte LtdRespondentCorporationAppeal AllowedLost

3. Judges

Judge NameTitleDelivered Judgment
Chao Hick TinJustice of the Court of AppealYes
Judith PrakashJudgeNo
Yong Pung HowChief JusticeNo

4. Counsels

Counsel NameOrganization
Lee Eng BengRajah & Tann
Lynette LeeRajah & Tann
Tang Khin WaiTan Kok Quan Partnership
Tan Kok QuanTan Kok Quan Partnership
Dawn ChewTan Kok Quan Partnership

4. Facts

  1. Show Theatres was incorporated by Shaw Pte and Eng Wah Pte in 1993.
  2. Shaw Pte held 75% of Show Theatres' shares, and Eng Wah Pte held 25%.
  3. In 1997, Show Theatres requested loans from shareholders for business needs.
  4. Shaw Pte and Eng Wah Pte provided loans of $375,000 and $125,000 respectively.
  5. On 6 August 1999, Show Theatres repaid the loans to Shaw Pte and Eng Wah Pte.
  6. At the time of repayment, Show Theatres was insolvent.
  7. On 24 October 2000, a creditor presented a petition to wind up Show Theatres.

5. Formal Citations

  1. Show Theatres Pte Ltd (in liquidation) v Shaw Theatres Pte Ltd and Another, CA 37/2002, [2002] SGCA 42

6. Timeline

DateEvent
Show Theatres incorporated by Shaw Pte and Eng Wah Pte.
Show Theatres called on shareholders for loans.
Shaw Pte and Eng Wah Pte furnished loans of $375,000 and $125,000 respectively.
Show Theatres repaid the loans to Shaw Pte and Eng Wah Pte.
A creditor of Show Theatres presented a winding up petition.
Winding-up order granted.
Court of Appeal held that Shaw Pte and Eng Wah Pte were 'persons connected' with Show Theatres.
Decision Date

7. Legal Issues

  1. Unfair Preference
    • Outcome: The court held that the payments made to Shaw Theatres Pte Ltd and Eng Wah Pte Ltd constituted unfair preference.
    • Category: Substantive
    • Sub-Issues:
      • Payments made to 'person connected' with company in liquidation
      • Interpretation of 'associate'
  2. Interpretation of 'Associate'
    • Outcome: The court interpreted 'associate' in the context of determining whether payments were made to a 'person connected' with the company.
    • Category: Substantive

8. Remedies Sought

  1. Restoration of funds to the company

9. Cause of Actions

  • Unfair Preference

10. Practice Areas

  • Commercial Litigation
  • Insolvency Litigation
  • Corporate Restructuring

11. Industries

  • Entertainment

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Quistclose Investments Ltd v Rolls Razor LtdN/AYes[1970] AC 567United KingdomCited regarding the argument that the sums were moneys held by Show Theatres on a trust.
Re Fairway Magazines LtdN/AYes[1993] BCLC 643United KingdomCited regarding the rebuttal of the presumption of unfair preference.
Cheong Kim Hock v Lin Securities (Pte)N/AYes[1992] 2 SLR 349SingaporeCited regarding the leave to raise a point of law.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50) s 329(1)Singapore
Bankruptcy Act s 99(1)Singapore
Bankruptcy Act s 99(2)Singapore
Bankruptcy Act s 100(1)(b)Singapore
Bankruptcy Act s 99(4)Singapore
Bankruptcy Act s 99(5)Singapore
Bankruptcy Act s 101(4)Singapore
Bankruptcy Act s 101(6)Singapore
Bankruptcy Act s 101(9)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Unfair preference
  • Person connected
  • Associate
  • Liquidation
  • Winding up
  • Insolvency

15.2 Keywords

  • Unfair preference
  • Company winding up
  • Associate
  • Liquidation
  • Insolvency

17. Areas of Law

Area NameRelevance Score
Winding Up95
Unfair preferences90
Company Law80
Bankruptcy70
Corporate Insolvency60
Contract Law30

16. Subjects

  • Bankruptcy
  • Company Law
  • Insolvency
  • Corporate Law