Re Conchubar Aromatics Ltd: Scheme of Arrangement, Creditor Voting & Companies Act s 210

The Singapore High Court heard applications by Conchubar Aromatics Ltd and UVM Investment Corporation for the court's approval of a proposed scheme of arrangement under Section 210 of the Companies Act. SK Engineering and Construction Co. Ltd, a creditor, opposed the applications. The court granted the sanction for the proposed scheme, finding that the statutory requirements were met, even after discounting the votes of related creditors. The court also addressed arguments regarding the scheme's contingency and uncertainty, and allegations of dishonesty. The court found that the proposed scheme was sufficiently clear and certain and that there was insufficient evidence of dishonesty.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Sanction granted under s 210(3AB) of the Companies Act for the proposed Scheme.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court sanctioned a scheme of arrangement for Conchubar Aromatics Ltd and UVM Investment Corporation, despite creditor opposition.

1.7 Decision Date

19 December 2016

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Conchubar Aromatics Ltd	Applicant	Corporation	Scheme Sanctioned	Won	Chia Tze Yung Justin of Harry Elias Partnership LLP Kok Yee Keong of Harry Elias Partnership LLP Andy Lem of Harry Elias Partnership LLP Jaclyn Leong of Harry Elias Partnership LLP
UVM Investment Corporation	Applicant	Corporation	Scheme Sanctioned	Won	Chia Tze Yung Justin of Harry Elias Partnership LLP Kok Yee Keong of Harry Elias Partnership LLP Andy Lem of Harry Elias Partnership LLP Jaclyn Leong of Harry Elias Partnership LLP
SK Engineering and Construction Co. Ltd	Respondent	Corporation	Opposition Dismissed	Lost	Jamal Siddique of Shook Lin & Bok LLP Debby Lim of Shook Lin & Bok LLP

3. Judges

Judge Name	Title	Delivered Judgment
Aedit Abdullah	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Chia Tze Yung Justin	Harry Elias Partnership LLP
Kok Yee Keong	Harry Elias Partnership LLP
Andy Lem	Harry Elias Partnership LLP
Jaclyn Leong	Harry Elias Partnership LLP
Jamal Siddique	Shook Lin & Bok LLP
Debby Lim	Shook Lin & Bok LLP

4. Facts

Conchubar and UVM sought court's leave to convene meetings for a proposed scheme of arrangement.
SKEC opposed the applications, arguing that related creditors' votes should be disregarded.
The proposed scheme was contingent upon the acceptance of the JEI Proposal.
The R&M of JAC indicated that the JEI Proposal was not acceptable in its present terms.
The Security Agent noted that the proposed sale of shares would breach share charges.
The court found that Chemicals was related to Conchubar, and MacNair and Emirates to UVM.
The court applied a discount to the votes of related creditors but found the statutory majority was still met.

5. Formal Citations

Re Conchubar Aromatics Ltd and another matter, , [2016] SGHC 279
Conchubar Aromatics Ltd, Originating Summons No 153 of 2016, Originating Summons No 153 of 2016
UVM Investment Corporation, Originating Summons No 154 of 2016, Originating Summons No 154 of 2016
SKEC, Summons No. 4396 of 2016, Summons No. 4396 of 2016

6. Timeline

Date	Event
2005-05-30	Jurong Aromatics Corporation Pte Ltd incorporated.
2010-05-06	Orient Time Capital Ltd incorporated.
2010-08-20	Conchubar Aromatics Ltd incorporated.
2011-03-31	Convertible Bond Agreement signed.
2015-04-30	Chemicals assigned portion of claim against Conchubar to Universal and Estanil.
2015-04-30	MacNair assigned portion of claim against UVM to Emirates.
2015-07-13	Jurong Energy International Pte Ltd incorporated.
2015-08-25	Chemicals demanded Conchubar's immediate payment of the guaranteed sum.
2015-09-28	Jurong Aromatics Corporation Pte Ltd put into receivership.
2016-03-18	Court granted leave for Applicants to convene meetings.
2016-05-19	Scheme Meetings took place.
2016-08-29	Applicants sought court’s approval of the proposed Scheme.
2016-09-07	SKEC applied for leave to appeal.
2016-10-06	Parties heard regarding leave to appeal.
2016-12-20	Judgment delivered.

7. Legal Issues

Sanction of Scheme of Arrangement
- Outcome: The court granted the sanction for the proposed scheme of arrangement.
- Category: Substantive
- Sub-Issues:
  - Compliance with statutory provisions
  - Fair representation of creditors
  - Reasonableness of the scheme
- Related Cases:
  - [2012] 2 SLR 213
Related Party Creditors
- Outcome: The court determined that Chemicals, MacNair, and Emirates were related creditors and applied a discount to their votes, but the requisite majority was still met.
- Category: Substantive
- Sub-Issues:
  - Discounting votes of related creditors
  - Definition of 'special interests'
  - Influence of relationship on voting decision
- Related Cases:
  - [2012] 2 SLR 213
  - [2003] 3 SLR(R) 629
  - [1968] 1 NSWR 759
Contingent Schemes
- Outcome: The court found that the proposed scheme was sufficiently clear and certain, despite being contingent on the acceptance of the JEI proposal.
- Category: Substantive
- Sub-Issues:
  - Uncertainty of contingent schemes
  - Clarity and certainty of terms
  - Machinery for variation of terms
- Related Cases:
  - [2000] NSWSC 82
  - [2014] EWHC 2457 (Ch)

8. Remedies Sought

Court Sanction of Scheme of Arrangement
Moratorium on legal proceedings

9. Cause of Actions

Application for Scheme of Arrangement

10. Practice Areas

Restructuring
Corporate Law
Commercial Litigation

11. Industries

Chemicals
Investment

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appeal	Court of Appeal	Yes	[2012] 2 SLR 213	Singapore	Cited for guidance on determining the appropriate discount to apply to related party creditors' votes in a scheme of arrangement.
UDL Argos Engineering & Heavy Industries Co Ltd v Li Oi Lin	N/A	Yes	[2001] 3 HKLRD 634	Hong Kong	Cited for the principle that creditors should be divided into separate classes if their rights are so dissimilar that they cannot sensibly consult together with a view to their common interest.
Wah Yuen Electrical Engineering Pte Ltd v Singapore Cables Manufacturers Pte Ltd	Court of Appeal	Yes	[2003] 3 SLR(R) 629	Singapore	Cited for the principle that related party creditors do not have to vote as a separate class simply because they are related creditors.
Re Halley’s Departmental Store Pte Ltd	N/A	Yes	[1996] 1 SLR(R) 81	Singapore	Cited for the principle that the overarching consideration of a court asked to sanction a proposed scheme is whether the proposed scheme is a fair one.
Re Landmark Corporation Ltd	Supreme Court of New South Wales	Yes	[1968] 1 NSWR 759	New South Wales	Cited for the principle that the votes of associated companies could have little weight when establishing what is best in the interests of the class of ordinary unsecured creditors.
Re NRMA Ltd	N/A	Yes	[2000] NSWSC 82	New South Wales	Cited regarding whether the Scheme was bad for lack of certainty, as it carried within itself machinery for variation of its own terms.
Re Homemaker Retail Management	N/A	Yes	[2001] NSWSC 1058	New South Wales	Cited regarding provisions allowing schemes to be changed after they have received court approval.
Re Lombard Medical Technologies Plc	N/A	Yes	[2014] EWHC 2457 (Ch)	United Kingdom	Cited regarding the court sanctioning a scheme which is conditional in one or more respects.
The “Nasco Gem”	Court of Appeal	Yes	[2014] 2 SLR 63	Singapore	Cited for the definition of an interlocutory application in the context of the Supreme Court of Judicature Act.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50)	Singapore
Evidence Act (Cap 97, 1997 Rev Ed)	Singapore
Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Scheme of Arrangement
Creditors
Related Party
Statutory Majority
Contingent Scheme
JEI Proposal
Receivers and Managers
Senior Lenders
Failsafe Payments
Discounting Votes

15.2 Keywords

scheme of arrangement
creditors
related party
companies act
insolvency
singapore

17. Areas of Law

Area Name	Relevance Score
Schemes of Arrangement	90
Insolvency Law	80
Company Law	75
Corporate Restructuring	70
Bankruptcy	60
Commercial Disputes	50
Contract Law	30

16. Subjects

Insolvency
Corporate Restructuring
Schemes of Arrangement