SINGAPORE’S High Court on Monday (Feb 13) granted the application by a pioneer member of the Laguna National Golf and Country Club to wind up the club, and said that the club’s trustee, British and Malayan Trustees (BMT), would be in a position of conflict of interest once the winding-up starts. 

Lim How Teck had filed a petition to wind up the club after it failed to pay back millions of dollars owed to a group of noteholders. The 30-year-old notes, issued to finance the construction of the club, were due for redemption in June 2021.

The notes amounted to S$70.6 million in value, the club’s 2020 financial statements indicated.

The owner of the club, motoring tycoon Peter Kwee, had written to the trustee the day before the redemption date, saying the club was unable to fulfil the redemption due to its “current financial position”. 

Laguna had fought Lim’s petition, filed Apr 4, 2022, arguing that a clause in the notes agreement says that only the trustee may pursue action to enforce the rights of noteholders against the company, unless it fails to do so.

In the last court hearing on Feb 6, senior counsel Tan Chee Meng, representing Lim, referred to evidence that BMT had demonstrated “unjustifiable unwillingness” to take action against Laguna. 

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On Monday (Feb 13), judge Chua Lee Ming noted that BMT had confirmed that it would act if directed in writing by sufficient noteholders as required, so the court did not agree that BMT had been “unjustifiably unwilling” to carry out its duty.

The court also noted that BMT does not have to comply with directions from the noteholders, unless it is “indemnified to its satisfaction against all actions, proceedings, claims and demands”, which may thereby render itself liable. 

In the Feb 6 hearing, senior counsel Tan had also argued that the trustee would be in a conflict-of-interest situation if it were the applicant in the winding-up proceedings against the club, while also facing “a potential claim by some noteholders for breach of its duties under the Trust Deed”. 

Tan did not show how the trustee’s interest in protecting itself against potential claims by some noteholders would result in a conflict of interest, but the court has said that BMT would indeed be in a position of conflict of interest “once the winding up commences”. 

The court said that once the club is ordered to be wound up, BMT – as the applicant in the winding-up proceedings – would need to continue liaising with the liquidators and provide them with all relevant information, thereby considering the noteholders’ interests. 

The court said: “As the trustee is facing potential claims by some noteholders, its interest in protecting itself against such claims would conflict with its duty to protect the interests of the noteholders.

“The trustee may have information that is relevant to the liquidators, but which may be adverse to its own interests in any action brought by the noteholders against it.” 

Because there is no dispute that the club is unable to pay its debts, the court ordered that the club be wound up. It also appointed Cameron Lindsay Duncan and David DongWon Kim of KordaMentha Restructuring, as liquidators.

The court also ordered that the costs of the proceedings be taxed and be paid to Lim out of the assets of the company.

An e-mail notice sent to club members on Monday referred to Laguna National Golf and Country Club as the “old company” and, announced that a liquidator has been appointed to handle the matter of the unsecured notes.

In the notice, members were also reassured that the new company, Laguna National Golf Resort Club, would not be affected by the winding-up.

Club owner Peter Kwee, in an earlier interview with The Business Times, said that another move he took to ringfence the company’s liabilities – that is, the liabilities of the Laguna National Golf and Country Club – was to move its core business and assets to another company, Laguna Hotel Holdings.

He told BT that he had to set up a new company to get financing from banks to build the new hotel and revamp the golf course when he took over the club in 2001 from a joint venture led by NatSteel Resorts International (now NSL Resorts International). As at Jun 11, 2021, the day the unsecured notes were due for redemption, Laguna National Golf and Country Club had ceased operations, he said.