In the freshly released judgment in Re Empire Capital Resources Pte Ltd [2018] SGHC 36, the Singapore High Court reiterated that a scheme of arrangement under Singapore law could lawfully release third-party claims, i.e. the creditors’ claims against entities / persons other than (or in addition to) the scheme applicant.

A unique feature of the case is that the applicant was the guarantor of certain liabilities, rather than the primary obligor. In Justice Aedit Abdullah’s view, this did not make a difference as a scheme could release current as well as contingent claims.

The Court however cautioned that where the purported scheme seeks to release the applicant’s and a third party’s debts, there must be a nexus or connection between such debts. In the absence of such a nexus or connection, the purported scheme would fall outside the ambit of Section 210 of the Companies Act.

The Court however declined to elaborate as to what would constitute a sufficient nexus, save that it existed on the present facts. It will interesting to see – whether on appeal or in a future decision – the factors considered in determining the existence of such a “nexus”.

The full judgment is available for viewing on Singapore Law Watch here. This link typically expires within 3 months.


25 February 2018

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