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Singapore – Insolvency: Re International Formwork & Scaffolding Pte Ltd [2013] SGHC 225.

12 March, 2014

 

Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution

 

High Court determines extent and priority of provisional liquidators’ equitable lien – it extends over all the assets of the company, and in priority to a subsequent liquidator’s statutory entitlement to fees and expenses

 

In this case, the High Court was faced with competing claims between provisional liquidators and the subsequent liquidators of a company over the provisional liquidators’ fees and expenses. The questions to be decided were the extent of the provisional liquidators’ lien over the company’s assets, and the priority of the provisional liquidators’ lien in the statutory scheme set out in s328 of the Companies Act.

 
The High Court held in favour of the provisional liquidators, and affirmed that provisional liquidators of a company have an equitable lien over the assets of the company, out of which they are entitled to be paid their fees and expenses. The High Court further clarified that the equitable lien extends over all the assets of the company, including physical assets and things-in-action, regardless of whether such assets were realised into funds by the provisional liquidators during their appointment. There was also no requirement for a provisional liquidator to demonstrate exactly how he had preserved, protected or enhanced the value of each asset before the asset would fall within the equitable lien. In any event, on the facts, it was not disputed that the provisional liquidators took control of all the assets of the company, including things-in-action, and had in fact preserved and protected such assets.

 
The High Court also held that the provisional liquidators’ equitable lien arises at general law and stands outside of the statutory scheme of priorities in s328 of the Companies Act. The result is that a provisional liquidator’s entitlement to his fees and expenses takes priority over a liquidator’s entitlement to his fees and expenses under s328(1)(a) Companies Act. In the circumstances, the High Court ordered that the provisional liquidators’ agreed fees and expenses be paid in full from the assets of the Company.

 
The extent and priority of a provisional liquidators’ equitable lien were novel issues of law that had not previously been decided in the Singapore Court.

 

Rajah & Tann

 

For further information, please contact:

 

Francis Xavier SC, Partner, Rajah & Tann
francis.xavier@rajahtann.com


Lai Yew Fei, Partner, Rajah & Tann

yew.fei.lai@rajahtann.com

 

Rajah & Tann Dispute Resolution Practice Profile in Singapore

 

Homegrown Dispute Resolution Law Firms in Singapore

 

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