BNY v Celestial Nutrifoods: s285 Companies Act Examination of PwC

The High Court of Singapore heard an application by the liquidator, Mr. Yit Chee Wah, of Celestial Nutrifoods Limited, to examine PricewaterhouseCoopers LLP (PwC), the company's former auditors, under Section 285 of the Companies Act. The liquidator sought documents and information related to the company's affairs to investigate suspicious transactions and reconstruct the company's financial records. PwC resisted the application, citing concerns of oppression, potential illegality under Chinese law, and the relevance of its working papers. The court, Judith Prakash J, allowed the application, ordering PwC to produce the requested documents, finding that the liquidator's request was justified and did not constitute oppression. The court deferred the decision on oral examination.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application allowed; PricewaterhouseCoopers LLP and its representatives must produce documents requested by the liquidator.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

High Court allows liquidator's application to examine PwC under s285 of the Companies Act, concerning Celestial Nutrifoods' collapse.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Yit Chee WahApplicantIndividualApplication AllowedWon
PricewaterhouseCoopers LLPOtherLimited Liability PartnershipRequired to Produce DocumentsLost
Celestial Nutrifoods LtdDefendantCorporationWinding Up OrderLost
BNY Corporate Trustee Services LtdPlaintiffCorporationApplication AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Hing Shan Shan BlossomDrew & Napier LLC
Mohan GopalanDrew & Napier LLC
Chan Wei MengDrew & Napier LLC
Ang Yao Long RonnieDrew & Napier LLC
Alvin Yeo SCWongPartnership LLP
Jenny TsinWongPartnership LLP
Wendy LinWongPartnership LLP

4. Facts

  1. Mr. Yit Chee Wah is the liquidator of Celestial Nutrifoods Limited.
  2. PwC was the auditor of Celestial Nutrifoods from FY 2004 to FY 2009.
  3. Celestial Nutrifoods was listed on the Singapore Stock Exchange in 2004.
  4. The company issued Zero Coupon Convertible Bonds in 2006.
  5. The company failed to redeem the bonds in 2009.
  6. BNY Corporate Trustee Services Ltd commenced winding up proceedings against the company.
  7. The liquidator discovered suspicious transactions involving the company's assets.

5. Formal Citations

  1. BNY Corporate Trustee Services Ltd v Celestial Nutrifoods Ltd, CWU No 195 of 2010 (Summons No 2473 of 2013), [2014] SGHC 155

6. Timeline

DateEvent
Celestial Nutrifoods Limited incorporated in Bermuda.
Celestial Nutrifoods listed on the Singapore Stock Exchange.
Celestial Nutrifoods raised S$235m by issuing Zero Coupon Convertible Bonds.
Bondholders exercised put options to redeem bonds.
Celestial Nutrifoods failed to redeem bonds.
KPMG Singapore appointed to conduct an independent review.
PwC issued the FY 2009 audit report.
PwC attended Audit Committee meeting.
BNY Corporate Trustee Services Ltd issued a statutory demand against Celestial Nutrifoods.
Mr. Yit Chee Wah appointed provisional liquidator.
Celestial Nutrifoods wound up; Mr. Yit became the Liquidator.
High Court decision on the application to examine PwC.

7. Legal Issues

  1. Section 285 of the Companies Act
    • Outcome: The court interpreted Section 285 expansively, emphasizing its purpose to assist the liquidator in gathering information.
    • Category: Procedural
    • Sub-Issues:
      • Scope of liquidator's powers
      • Oppression of examinee
      • Relevance of information sought
  2. Auditor's Duty of Confidentiality
    • Outcome: The court found that PwC would not be in breach of confidentiality obligations by providing historical documents to the liquidator.
    • Category: Substantive
    • Sub-Issues:
      • Breach of confidentiality
      • Disclosure of business secrets
      • Risk of civil liability
  3. Auditor's Working Papers
    • Outcome: The court held that the fact that working papers are the auditor's property does not preclude their disclosure if they contain relevant information.
    • Category: Substantive
    • Sub-Issues:
      • Proprietary information
      • Relevance to investigation
      • Public interest
  4. Conflict with PRC Law
    • Outcome: The court was not satisfied that disclosure would subject PwC to criminal sanctions in the PRC.
    • Category: Jurisdictional
    • Sub-Issues:
      • State secrets
      • Overseas issuance and listing of securities
      • Criminal sanctions

8. Remedies Sought

  1. Examination of Company Officers and Auditors
  2. Production of Documents

9. Cause of Actions

  • Winding Up
  • Breach of Contract (Bonds)

10. Practice Areas

  • Insolvency
  • Liquidation
  • Auditing

11. Industries

  • Accounting
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Liquidator of W&P Piling Pte Ltd v Chew Yin What and othersHigh CourtYes[2004] 3 SLR(R) 164SingaporeCited as a leading authority on the interpretation and application of Section 285 of the Companies Act, particularly regarding the liquidator's powers and duties.
Re Lion City Holdings Pte LtdHigh CourtYes[2003] 3 SLR(R) 493SingaporeCited as a relevant authority on the principles governing applications under Section 285 of the Companies Act.
Re British & Commonwealth Holdings plc v Spicer and OppenheimHouse of LordsYes[1993] 1 AC 426England and WalesCited as a persuasive foreign judgment on similar legislation, particularly regarding the disclosure of auditors' working papers.
In Re Rolls Razor Ltd (No 2)Chancery DivisionYes[1970] 1 Ch 576England and WalesCited as a persuasive foreign judgment on similar legislation.
Korea Asset Management Corp v Daewoo Singapore Pte Ltd (in liquidation)High CourtYes[2004] 1 SLR(R) 671SingaporeDistinguished; cited regarding the objectivity of a liquidator, but found not applicable to the present case due to differing facts.
Re Chesterfield United Inc and another company; Akers and another v Deutsche Bank AGUnknownYes[2013] 1 BCLC 709England and WalesCited for the principle that the possibility of litigation does not bar an examination order.
Re Kong Wah Holdings Ltd & Anor (in liquidation)UnknownYes[2004] 2 HKC 255Hong KongCited regarding the production of auditors' internal review papers and the balancing of interests between the liquidator and the auditor.
Re New China Hong Kong Group LtdUnknownYes[2003] 3 HKC 252Hong KongCited regarding the specificity of document identification in liquidator requests and the trust placed in the liquidator's assessment.
Joint Liquidators of Sasea Finance Ltd v KPMGUnknownYes[1998] BBC 216England and WalesCited regarding the public interest in assisting liquidators outweighing prejudice to the auditor.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed) s 285Singapore
PRC Criminal Law Art 219China
Provisions on Strengthening Confidentiality and Archives Administration of Overseas Issuance and Listing of Securities Art 6China
Law of the People’s Republic of China on Protecting the State Secrets Art 2China

15. Key Terms and Keywords

15.1 Key Terms

  • Liquidation
  • Auditor
  • Section 285 Companies Act
  • Working Papers
  • Suspicious Transactions
  • Confidentiality
  • State Secrets
  • Funding Agreement
  • Bondholders
  • PRC Subsidiaries

15.2 Keywords

  • liquidation
  • auditor
  • companies act
  • working papers
  • confidentiality
  • PricewaterhouseCoopers
  • Celestial Nutrifoods

17. Areas of Law

Area NameRelevance Score
Winding Up90
Liquidator's Duties80
Company Law75
Auditing65
Bankruptcy60
Commercial Disputes40
Financial Reporting Standards35
Contract Law30
Duty of Candour25
Evidence Law20
Fraud and Deceit15
Misrepresentation15
Arbitration10

16. Subjects

  • Insolvency
  • Auditing
  • Company Law