In Re Mingda Holding [2024] SGHC 130, the liquidator (“Liquidator“) of Mingda Holding Pte Ltd (“Mingda“) identified suspicious transactions between Mingda and some of its creditors (i.e. Orient Nickel Pte Ltd (“Orient“) and Mr Yang Mingdong (“Mr Yang“)) shortly before and after Mingda was placed into winding up. The Singapore High Court considered:
(a) the Liquidator’s application for the Court’s authorisation (prospective and retrospective) to appoint solicitors to assist him with his duties and to bring actions for Mingda, pursuant to section 144(1)(f) of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA“), and to enter into a creditor funding agreement (“CFA“) with the funding creditor, Amalgamated Metal Trading Ltd (“AMT“) to enable the bringing of the same; and
(b) AMT’s application to be given an advantage under section 204(3) of the IRDA in respect of the CFA.
Certain creditors, including Orient and Mr Yang, opposed the applications.
Liquidator’s Application
The Court granted the Liquidator authorisation to appoint solicitors, which would only take effect prospectively, not retrospectively. It did not have the power to backdate the appointment. Only prospective authorisation could be granted. The Liquidator’s appointment would only be authorised from the date of the resulting order in the application. Following from this, it would not be fair to Mingda and its creditors to enable the Liquidator to charge costs incurred from appointing solicitors up to this point to Mingda’s estate.
The Court held that the unfair preference claims against Orient pursuant to section 225 of the IRDA, and the claim against Mr Yang to recover a void disposition of property effected by section 130(1) of the IRDA, were each assignable under sections 144(1)(g) and 144(2)(b) of the IRDA, respectively. It granted the Liquidator authorisation to enter into the CFA with AMT, because: (i) there was no reason to question the Liquidator’s good faith; (ii) the CFA was in the interests of Mingda and its creditors; and (iii) the CFA did not conflict with any public policy or written law.
AMT’s Application
The Court granted the order under section 204(3) of the IRDA allowing an advantage to be given to AMT, finding it to be fair and reasonable in the circumstances, and that sufficient safeguards had been proposed.
First, preliminarily, AMT was a creditor with locus standi under section 204(2) of the IRDA to apply for such an order.
Second, the Court considered the following factors:
(a) the actions against Orient and Mr Yang were necessary in the present case;
(b) it would be in the public interest to empower Mingda to pursue claims against Orient and Mr Yang;
(c) the risk borne by AMT was closer to moderately high, and was a factor in favour of granting the order;
(d) the other creditors failed to provide funding to Mingda when given the opportunity; and
(e) while some creditors objected, significantly less weight ought to be given to the views of objecting creditors where, as in the present case, they were the precise targets of the litigation that the Liquidator intended to embark on.
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