PARAKOU INVESTMENT HOLDINGS PTE LTD & Anor v PARAKOU SHIPPING PTE LTD (In Liquidation)

PARAKOU INVESTMENT HOLDINGS PTE LTD & Anor v PARAKOU SHIPPING PTE LTD (In Liquidation)

On the facts the Court of Appeal held (1) Parakou was insolvent by November 2008 and directors owed duties to creditors; (2) no genuine restructuring plan existed; (3) C C Liu was a shadow director while Liu Por and Yang were not de facto directors pre-22 December 2008; (4) sale of OPL vessels was not at an undervalue on the evidence (sale price fell within valuation range and fleet discount); (5) PIH set-off was valid; (6) commencing and continuing the London Arbitration and HK proceedings primarily to postpone exposure to statutory clawback breached directors’ duties; and (7) Bonus Payments, Salary Increases, PIH and PSSA repayments and Six Employees’ Salary Payments breached directors’...

Citation
[2018] SGCA 03
Parties
Appellant (civil Appeal No 55); Fifth Respondent (civil Appeal No 58); Defendant (suit No 434): Parakou Investment Holdings Pte Ltd; Appellant (civil Appeal No 55); Sixth Respondent (civil Appeal No 58); Defendant (suit No 434): Parakou Shipmanagement Pte Ltd; Appellant (civil Appeal No 58); Respondent (civil Appeals Nos 55–57); Plaintiff (suit No 434): Parakou Shipping Pte Ltd (in liquidation); Appellant (civil Appeal No 56); Third Respondent (civil Appeal No 58); Defendant (suit No 434): Liu Por; Appellant (civil Appeal No 56); Fourth Respondent (civil Appeal No 58); Defendant (suit No 434): Yang Jianguo; Appellant (civil Appeal No 57); First Respondent (civil Appeal No 58); Defendant (suit No 434): Chik Sau Kam; Appellant (civil Appeal No 57); Second Respondent (civil Appeal No 58); Defendant (suit No 434); Deceased (estate Represented by Chik Sau Kam by Undertaking): Liu Cheng Chan
Court
Court of Appeal
Jurisdiction
Singapore
Judgment Date
17 January 2018
Case Number
CA/CA 56/2017|CA/CA 57/2017|CA/CA 55/2017|CA/CA 58/2017
Procedural Posture
Civil Appeals Concerning Company and Insolvency Law (avoidance of Transactions, Directors’ Duties) / Court of Appeal Judgment on Appeals From High Court (judgment Delivered 7 November 2017; Reserved; Published 17 January 2018)
Outcome
Appeals dismissed in large part and allowed in part; High Court findings varied as to sale of OPL Vessels (reversed), liability for commencing/continuing proceedings (findings reversed in favour of liquidator), other primary liability and many findings below affirmed; remedial options granted to liquidator.
Legal Topics
Transactions at Undervalue and Clawback, Undue Preference, Fiduciary Breaches, Shadow and De Facto Directors, Knowing Receipt and Dishonest Assistance, Set Off, Account of Profits, Abuse of Process/delay Tactics
Source Language
English
Insolvency Law Company Law Directors’ Duties Civil Procedure Transactions at Undervalue and Clawback Undue Preference Fiduciary Breaches Shadow and De Facto Directors +4 more

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Parties

Parakou Investment Holdings Pte Ltd

Appellant (civil Appeal No 55); Fifth Respondent (civil Appeal No 58); Defendant (suit No 434)

Parakou Shipmanagement Pte Ltd

Appellant (civil Appeal No 55); Sixth Respondent (civil Appeal No 58); Defendant (suit No 434)

Parakou Shipping Pte Ltd (in liquidation)

Appellant (civil Appeal No 58); Respondent (civil Appeals Nos 55–57); Plaintiff (suit No 434)

Liu Por

Appellant (civil Appeal No 56); Third Respondent (civil Appeal No 58); Defendant (suit No 434)

Yang Jianguo

Appellant (civil Appeal No 56); Fourth Respondent (civil Appeal No 58); Defendant (suit No 434)

Chik Sau Kam

Appellant (civil Appeal No 57); First Respondent (civil Appeal No 58); Defendant (suit No 434)

Liu Cheng Chan

Appellant (civil Appeal No 57); Second Respondent (civil Appeal No 58); Defendant (suit No 434); Deceased (estate Represented by Chik Sau Kam by Undertaking)

Procedural Posture

Civil Appeals Concerning Company and Insolvency Law (avoidance of Transactions, Directors’ Duties) / Court of Appeal Judgment on Appeals From High Court (judgment Delivered 7 November 2017; Reserved; Published 17 January 2018)

Legal Issues

  1. 1 Whether there was a genuine restructuring plan (March 2008 Resolution)
  2. 2 Whether Parakou was insolvent in November 2008 (Galsworthy claim valuation)
  3. 3 Whether C C Liu was a shadow director after 31 December 2008

Ratio Decidendi

On the facts the Court of Appeal held (1) Parakou was insolvent by November 2008 and directors owed duties to creditors; (2) no genuine restructuring plan existed; (3) C C Liu was a shadow director while Liu Por and Yang were not de facto directors pre-22 December 2008; (4) sale of OPL vessels was not at an undervalue on the evidence (sale price fell within valuation range and fleet discount); (5) PIH set-off was valid; (6) commencing and continuing the London Arbitration and HK proceedings primarily to postpone exposure to statutory clawback breached directors’ duties; and (7) Bonus Payments, Salary Increases, PIH and PSSA repayments and Six Employees’ Salary Payments breached directors’...

Court Disposition

Appeals dismissed in large part and allowed in part; High Court findings varied as to sale of OPL Vessels (reversed), liability for commencing/continuing proceedings (findings reversed in favour of liquidator), other primary liability and many findings below affirmed; remedial options granted to liquidator.

Orders

  • Sale of OPL Vessels held not to be a transaction at an undervalue; sale stands with PIH to retain vessels
  • PIH Set-Off of SGD 1,732,239 upheld as valid statutory set-off