When an unregistered foreign company becomes insolvent in both its place of incorporation and in Singapore, should its assets in Singapore be remitted to the foreign liquidator or be held in Singapore to satisfy locally incurred liabilities first? This was the question that the Singapore Court of Appeal  faced in  Beluga Chartering GmbH (in liquidation) and others v Beluga Projects (Singapore) Pte Ltd (in liquidation) and another (deugro (Singapore) Pte Ltd, non-party) [2014] SGCA 14.


In 2011, Beluga Chartering, a company incorporated in Germany, was placed into liquidation by a German Court and a German liquidator was appointed as its permanent insolvency administrator. In 2012, following an application by a German creditor, Beluga Chartering was wound up in Singapore as an unregistered company under s 351 of the Companies Act (“the Act”), and Singapore liquidators were appointed. The Singapore liquidators obtained a payment of US$849,647.42 from a non-party (deugro Singapore) in full settlement of the latter’s liability to Beluga Chartering (“the Asset”).

Subsequently, the Singapore liquidators filed an application to the High Court to ascertain whether they were entitled to remit the Asset to the seat of the principal liquidation in Germany, to be dealt with in accordance with German insolvency law. The application was opposed by the wholly owned Singapore-incorporated subsidiaries of Beluga Chartering, namely, Beluga Singapore and Beluga Asia (“the Singapore subsidiaries”), which were seeking to enforce a local judgment debt of $1,415,631.11 against Beluga Chartering. The Singapore subsidiaries were themselves wound up in 2011 and 2012 respectively, with the Official Receiver appointed as the liquidator for Beluga Singapore, while two private liquidators were appointed for Beluga Asia.

The High Court held that the Singapore liquidators were obliged to pay the judgment debt owed to the Singapore subsidiaries before remitting any remaining proceeds to the German liquidator in view of s 377(3)(c) of the Act which applied to Beluga Chartering, even though it was not carrying on business in Singapore. Section 377(3)(c) established a scheme for any local assets to be applied first to satisfy debts and liabilities incurred in Singapore before any residual amount is remitted to be foreign liquidator (“the Ring- Fencing Provision”). Although the High Court accepted that the usual course in the case of a foreign company which did not carry on business in Singapore would be to disapply the Ring-Fencing Provision, it found that the Singapore subsidiaries would suffer real prejudice and declined to do so.


The Court of Appeal reversed the High Court’s decision, holding that the Singapore liquidators of Beluga Chartering were at liberty to remit the company’s assets in Singapore to the German liquidators subject to any deductions authorised or required under the Act, notwithstanding the existence of the Singapore subsidiaries’ unsatisfied judgment debt. The Court of Appeal’s decision rested on two main grounds.

Firstly, the Court held that the Ring-Fencing Provision did not apply to Beluga Chartering. Through a deep and purposive analysis of the relevant provisions of the Act, the Court of Appeal concluded that the Ring-Fencing Provision only applied to foreign companies that have complied with the registration requirements, or are liable to do so because they intend to establish a place of business or commence carrying on business in Singapore. Since Beluga Chartering was not obliged to register under the Act, and had not established a place of business or carried on business in Singapore, the Ring-Fencing Provision did not apply to the Singapore liquidators.

Secondly, the Court declined to ring-fence the Singapore assets of Beluga Chartering under the common law ancillary liquidation doctrine, which was part of Singapore law. Under this doctrine, the court has a power to order assets that were collected locally in the ancillary liquidation to be remitted to the liquidators of the principal place of liquidation. However, the Court held that the doctrine did not give the court the power to authorise the Singapore liquidators to disapply the local statutory insolvency scheme so as to deprive the Singapore subsidiaries of any vested rights under the Act or other written law. On the facts, no issue of “disapplying” any local statutory insolvency provision arose as the Singapore subsidiaries were unsecured creditors and did not enjoy any other priority under the Act.

The Court also held that the courts did not have a discretion under the common law, analogous to that under the Ring-Fencing Provision, to direct that assets be remitted to the principal place of liquidation only after providing for local liabilities.


This decision suggests that if the Singapore subsidiaries were preferential creditors and had priority under the local statutory scheme, the outcome might well have been different. From a banking perspective, banks should be cautious in making unsecured loans (which is likely to be rare in practice) to unregistered foreign companies which do not have a place of business or carry on business in Singapore. This is because although it is not yet entirely clear whether the Singapore Courts are moving towards a model of “universal” collection and distribution of assets through the assistance of courts in different jurisdictions, this decision makes it extremely unlikely that local unsecured creditors will stand any chance of satisfying their claims against an unregistered foreign company which goes into liquidation in its place of incorporation and in Singapore.