Re Win-Win Aluminium Systems Pte Ltd

Tay Yong Kwang J:

[1] This is an application by Win-Win Aluminium Systems Pte Ltd (“the company”) pursuant to section 210 of the Companies Act (Cap 50, 2006 Rev Ed) for an order that the company be at liberty to convene a meeting of creditors, as defined in a proposed scheme of arrangement, for the purposes of considering and of approving, with or without modification, the said scheme of arrangement. One of the consequential orders sought in the application is that “all present, pending or contingent actions or proceedings as at the date of the order made herein, including but not limited to winding up proceedings, judicial management proceedings, arbitration, the appointment of a receiver and manager, the enforcement of any security or (by way of execution or otherwise) the enforcement against or recovery of any assets of the company be restrained or stayed except with the leave of court”.

[2] The affidavit in support of the application, affirmed by a director of the company, sets out the following facts. The company was incorporated on 14 February 1996 as an exempt private company limited by shares, with its registered office at 21 Tuas West Avenue, Singapore. Its authorised and paid up capital is $1.1 million. Three shareholders, including the abovesaid director, hold 25%, 36.4% and 38.6% of the shares respectively. The company is principally in the business of fabrication and installation of aluminium windows and cladding for buildings.

[3] The company was the subcontractor for aluminium cladding works in respect of Excalibur Centre, a building owned by Excalibur Land (S) Pte Ltd (“Excalibur”). The main contractor for the project was Excalibur’s closely related company, Tavica Design Pte Ltd (“Tavica”). The letter of award was finalised and signed on 19 March 1999 for the said subcontract works.

[4] The company claims that throughout the course of the project, its claims were underpaid and there were numerous delays from extensive variation works. The company commenced arbitration proceedings against Tavica on 12 February 2001 to recover some $1.813 million owed to it together with loss and damage for the delays. The limited resources of the company were thus channelled towards the arbitration, thereby preventing it from taking on any substantial projects.

[5] After the Excalibur project in 2000, the company remained a live but not very active company. Its accounts from 2002 to 2008 showed accumulated losses of some $1.92 million. Its accounts before 2002 are not available.

[6] The company wishes to continue with the arbitration proceedings as it believes that its claim therein is a meritorious one. It acknowledges that an interim award on some issues of fact was previously made in favour of Tavica in the arbitration. This award was accepted by the High Court in Suit No. 538 of 2001 (an action by Excalibur against the company and Leck Kim Koon (“Leck”)) and judgment for $151,041.01 was given against the company. The company paid up this judgment amount but has appealed against the High Court judgment by way of CA No. 57 of 2010 filed on 13 April 2010. It believes it has good grounds for the appeal. The appeal is not ready for hearing before the Court of Appeal.

[8] The company emphasized that during the existence of the scheme of arrangement, all participating creditors bound by the scheme will not be at liberty to commence legal proceedings or execution against the company or its guarantors for any debts owed by the company. However, the company reserves its rights to commence or continue legal proceedings for the recovery of outstanding debts owed to it.

[9] The directors of the company believe that carrying out the scheme of arrangement is a more viable alternative for its creditors in comparison to a compulsory liquidation scenario where the creditors are likely to receive no returns instead of the partial repayment of unsecured debts owed to them.

[16] In any event, the section 210 application is going to be fraught with difficulty since the company does not wish to include contingent creditors in its list of creditors. Problems will definitely arise where the value of the votes is concerned and that issue is going to be pivotal because if Tavica’s full claim is taken into account, it is not likely that the votes in favour of the proposed scheme of arrangement would reach the three-fourths in value necessary for it to become binding on the creditors. The issue whether Tavica should be recognised as a contingent creditor would also be highly contentious in view of the clear stand taken by each side. It would require some consideration of the respective merits of their dispute but that is precisely the matter under arbitration. The issue is likely to become the subject of an application to court and the result will be that the dispute in the arbitration is transferred indirectly to the court for adjudication. That, in my view, would be quite unacceptable.