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30-06-2011, 08:29 PM
(This post was last modified: 30-06-2011, 08:51 PM by RBM.)
Thanks for the signal Dydx,
I am not vested in Progen Holdings. But I admit to looking at them for a spell last year after reviewing what seemed to be potentially attractive fundamentals - Progen appeared a tad undervalued on first inspection. What put me off was some rather complicated bankruptcy type litigation which went against them - to the tune of Progen having to repay S$ 18 Mln or so.
Others will be able to articulate the nature of the litigation far better than I but this episode came across to me as something less than wholesome and the financial dimensions of the repayment were not minor for a company the size of Progen ........... so I decided to plonk my dollars elsewhere. I doubt this helps you but I wanted to ensure you and other buddies were aware.
http://www.lexology.com/library/detail.a...c8abdb72b0
(30-06-2011, 08:29 PM)RBM Wrote: Dydx and others,
I managed to dig up the attached weblink. This gives you the background to the litigation I mentioned in my previous post.
http://www.lexology.com/library/detail.a...c8abdb72b0
In case you have problems opening this, the Rajah & Tann article I referred to is as follows ............
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Progen Holdings Ltd to Refund S$18 million Payment
Lee Eng Beng SC, Nigel Pereira and Jonathan Lee from the Business
Finance and Insolvency Practice of Rajah & Tann LLP successfully
represented the Appellant in Chee Yoh Chuang and Anor (as
Liquidators of Progen Engineering Pte Ltd) v Progen Holdings Ltd
[2010] SGCA 31.
In this case, the Singapore Court of Appeal dealt with the issue of undue preference where an insolvent company made large payments to certain related creditors while seemingly ignoring other unrelated creditors.
On the facts, the Court found that the Respondent had failed to rebut
the statutory presumption that the transaction was made with the
desire to prefer the Respondent, and indeed, the evidence showed
that the transactions in question were in fact made with a desire to
prefer the Respondent.
Brief Facts
Progen Engineering Pte Ltd (“PEPLâ€), Progen Pte Ltd (“PPLâ€), and the
Respondent were all part of the Progen Group.
After a winding up order was made against PEPL, its liquidators
applied to Court for the return of substantial amounts of monies paid
by PEPL to the Respondent on the basis that they constituted unfair
preferences.
(i) The largest transaction was the repayment of a loan of about
S$11 million for the purpose of making a capital distribution to
the Respondent’s shareholders.
(ii) More than S$7 million was set-off from the debt of PPL to PEPL
against the debt of PEPL to the Respondent.
(iii) PEPL transferred funds to the Respondent for payment of
salaries and expenses of the Respondent’s employees, and also
as reimbursement for iron ore purchases.
It was common ground that the presumption of unfair preference arose on the facts, since the Respondent and PEPL were clearly connected through common directors. Here, the Court of Appeal held that the Respondent had failed to prove that the payments were not influenced by the desire to prefer.
With regard to the return of the S$11 million loan to the Respondent,
the Court found that the objective facts buttressed the statutory
presumption of the desire to prefer. First, the directors had made false assurances that the loan would not be repaid, and had gone on to flagrantly breach these assurances. Second, PEPL’s directors had
breached their personal duties to take their creditors’ interests into
account. Two of the directors were also major shareholders of the
Respondent, and had thus benefitted from the repayment. Third, the
commercial consideration for the transaction offered by the
Respondent was without merit and failed to justify the repayment.
With regard to the other impugned transactions, it was similarly found
that the Intention to prefer the Respondent had not been rebutted.
(i) The Respondent had argued that these payments were part of
settled practice. However, “past practice†is in itself insufficient to
rebut the presumption of the desire to prefer. It is only relevant if
those practices show that the creditor has been providing new value to the company to keep the company’s business going.
(ii) Here, the payments to the Respondent did not arise out of
arrangements from which the Respondent could be said to have
provided new value to PEPL.
Therefore, the Respondent was ordered to repay to the liquidators all
monies required to settle debts to unrelated creditors up to a sum of
S$18,514,287.97, being the amount of debt owed by PEPL to the
Respondent.
++++++++++++++
RBM, Retired Botanic MatSalleh
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This counter is on sale today. Not sure what is happening, but I add some more.
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