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Smitha Menon, partner at WongPartnership, and Stephanie Yeo, associate at the firm, explain the recent case of Re Opti-Medix Ltd (in liquidation) and another, and consider the effect of the judgment on the principle of universalism.
Re Opti-Medix Ltd (in liquidation) and another matter  SGHC 108
The companies involved were incorporated in the BVI. Their main area of business was factoring receivables from medical institutions in Japan, which was funded by non-recourse notes issued by the companies. The notes were governed by Singapore law, with a Singapore address for service of notices, but were marketed in Japan by Japanese brokers. The proceeds were then transferred to Singapore bank accounts. In 2015, the securities and surveillance commission of Japan suspended the issuing of new notes by the companies as there was insufficient profit to meet payments under the notes. Bankruptcy proceedings were subsequently commenced against the companies in Japan and bankruptcy orders were made by the Tokyo District Court in November 2015.
While the companies had primarily Japanese creditors, they had some Singapore creditors and funds held in their Singapore bank accounts. The bankruptcy trustee who had been appointed by the Tokyo District Court therefore sought to exercise his powers under the Japanese bankruptcy orders to ascertain, administer and dispose of the companies’ assets. However, the exercise of the power was complicated by the fact that no insolvency proceedings had been brought in the BVI (where the companies were incorporated and registered) and the existing legislation in Singapore did not provide for a specific process to obtain recognition of such a foreign liquidation order.
Before the Singapore Court, it was submitted that although the bankruptcy trustee had not been appointed in the BVI which was the place of incorporation of the companies, there was no likelihood of insolvency proceedings there. There being no actual, or potential competing claims by any other liquidators, the bankruptcy trustee, having been appointed by the court of the country where the companies had conducted their main business, should therefore be allowed to exercise his powers under the Japanese bankruptcy orders in Singapore. In this regard, the Hong Kong case of Re Russo Asiatic Bank  HKCU 8 was cited as an example of where recognition was granted to a liquidator who had been appointed by a court that was not of the company’s country of incorporation.
In addition, it w
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