NISHIKI HOLDINGS PTE LTD & 2 Ors v SANKATY EUROPEAN INVESTMENTS S.A.R.L & 2 Ors

NISHIKI HOLDINGS PTE LTD & 2 Ors v SANKATY EUROPEAN INVESTMENTS S.A.R.L & 2 Ors

The court held that the Loan Agreement was valid because objective documentary evidence (notably the Latham & Watkins opinion, Sponsor Indemnity Agreement and negotiated amendments) entitled the lender to conclude shareholder knowledge and consent; however the appointment of HL China as Appraiser was invalid because...

Source-derived case information.

Citation
[2021] SGHC 286
Parties
1st Plaintiff: Nishiki Holdings Pte Ltd; 2nd Plaintiff: Nishiki Real Estate Pte Ltd; 3rd Plaintiff: Nishiki International Investments Pte Ltd; 1st Defendant: Sankaty European Investments S.A.R.L; 2nd Defendant: Sajjad Ahmad Akhtar; 3rd Defendant: Chin Sek Peng Michael
Court
General Division of the High Court
Jurisdiction
Singapore
Judgment Date
20 December 2021
Case Number
HC/S 84/2020
Procedural Posture
Suit / Judgment
Outcome
Loan Agreement upheld as valid and enforceable; appointment of HL China as Appraiser and HL China Valuation Report set aside; appointment of the Receivers declared invalid and void; plaintiffs' alternative claims that the Receivers acted in bad faith dismissed
Legal Topics
Director Conflicts of Interest, Apparent and Actual Authority, Contractual Interpretation of Appraisal Clause, Appointment and Removal of Receivers, Judicial Review of Valuation, Disclosure and Privilege, Good Faith in Appointments
Source Language
english
Agency Company Law Contract Receivership and Security Enforcement Valuation and Expert Evidence Director Conflicts of Interest Apparent and Actual Authority Contractual Interpretation of Appraisal Clause +4 more

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Summary, issues, holding and outcome

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Parties

Nishiki Holdings Pte Ltd

1st Plaintiff

Nishiki Real Estate Pte Ltd

2nd Plaintiff

Nishiki International Investments Pte Ltd

3rd Plaintiff

Sankaty European Investments S.A.R.L

1st Defendant

Sajjad Ahmad Akhtar

2nd Defendant

Chin Sek Peng Michael

3rd Defendant

Procedural Posture

Suit / Judgment

Legal Issues

  1. 1 Whether the lender was on notice that the sole director lacked authority to bind the companies in respect of the Additional Interest (Notice Issue)
  2. 2 Whether HL China qualified as the contractual "Appraiser" and whether the lender consulted the Borrower Agent as required (HL China Issue)
  3. 3 Whether there were manifest errors in the HL China/Enrix valuation (Valuation Issue)

Ratio Decidendi

The court held that the Loan Agreement was valid because objective documentary evidence (notably the Latham & Watkins opinion, Sponsor Indemnity Agreement and negotiated amendments) entitled the lender to conclude shareholder knowledge and consent; however the appointment of HL China as Appraiser was invalid because HL China did not meet the contractual definition of an appraiser with appraisal operations in Japan and the lender failed to consult NRE as required by Schedule 1, para 3(a); consequently the HL China Valuation Report was set aside and the receivers' appointment (which derived from that valuation) was invalid, while the plaintiffs' separate allegations of receivers' bad faith...

Court Disposition

Loan Agreement upheld as valid and enforceable; appointment of HL China as Appraiser and HL China Valuation Report set aside; appointment of the Receivers declared invalid and void; plaintiffs' alternative claims that the Receivers acted in bad faith dismissed

Orders

  • Set aside appointment of Houlihan Lokey (China) Limited as Appraiser and set aside the HL China Valuation Report
  • Declare the appointment of the 2nd and 3rd defendants as Receivers invalid and void (consequent on invalid valuation)