The High Court of the Republic of Singapore on Monday (6 July) granted Poh Fu Tek and Koh Seng Lee, both Directors and minority shareholders of Singapore-based Vermont UM Bunkering Pte. Ltd (Vermont), conditional leave under Section 216A of the Companies Act* to defend themselves while bringing any counterclaims in legal suits against Goldsland and Sin Hua.
According to the High Court Judgement granting the conditional leave, both Poh and Koh are entitled:
- To bring any action against the present and/or previous directors of Vermont for breaches of directors’ duties and conspiracy and in relation to the Alleged Debts in Suits 260 and 261.
- To bring any action against Goldsland and/or Sin Hua for dishonestly assisting the present and/or previous directors of Vermont in the latter’s breaches of duties and for conspiracy
The duo intends to defend the default judgements of multimillion dollar claims from Hong Kong companies Goldsland Holdings Company Limited (Goldsland) and Hong Kong Sin Hua Development Co., Ltd. (Sin Hua), and claim against the other directors of Vermont for breaches of fiduciary duties, stated the document.
In addition, they aim to claim against Goldsland and Sin Hua for dishonestly assisting the directors in breaches of their fiduciary duties; and claim against Goldsland, Sin Hua, and/or those directors for conspiracy to harm Vermont.
Singapore bunkering publication Manifold Times has provided a background summary of the 57-page judgement (that also includes details on the legal suits involving Poh and Koh) below:
A common link between Vermont, Goldsland and Sin Hua
Vermont was incorporated in Singapore in October 2009, and is owned by Hong Kong based Vermont Groups Limited (VGL) (51%), Poh (24.5%) and Koh (24.5%); VGL is in turn 70% owned by Sin Hua, which is 99.99% owned by Goldsland.
Both Sin Hua and Goldsland are under the management of Guangdong Guangxin Holdings Group Ltd (Guangdong Guangxin), part of the Guangxin group of companies (Guangxin Group) which comprised of state-owned enterprises operated by the Guangdong provincial government.
Wrongful trading results in over USD 10 million loss and a dispute over an alleged settlement agreement
Zhao Kundian (Zhao) was among the initial Majority Directors (nominated by the Guangxin Group through VGL) and served as both the Executive Director and General Manager of Vermont.
In 2010, Zhao informed Poh and Koh the Guangxin Group had sourced for trade receivable financial facilities from various banks.
This resulted in the duo entering into counter-guarantees in favour of Goldsland and Sin Hua in 2010 and 2014, under which they would each be responsible for a 24.5% share of any call on the parent company guarantees by the banks.
In 2011, it was discovered Zhao had traded wrongfully in breach of the agreed Trading Limit of a maximum of 10,000 metric tonnes of bunker fuel, resulting in losses of more than USD 10 million to Vermont.
On 29 June 2011, Zhao was removed as a Director by the Guangxin Group for his wrongful trading and replaced by Yang Sanhua (Yang) who ran the day-to-day operations of Vermont.
Meetings between Poh and Koh, the representatives of Goldsland, Sin Hua, and the Guangxin Group to decide who should pay for damages resulted in an alleged agreement that Guangxin Group would be solely responsible for the consequences of Zhao’s trading, according to Poh and Koh.
However, Li Bijian (Li), a Director of VGL, claims this agreement does not exist.
Disputed debt from Credit Facility and Loan Agreement
Around June 2010, Li claimed Vermont ran into cash flow difficulties and requested for financial assistance from its shareholders; though Poh and Koh were not agreeable to provide further funding.
A Request for Instructions on Borrowing Working Capital was issued on 14 June 2010 to Goldsland which stated Vermont had borrowed USD $8.19 million (and a standby letter of credit of USD 4.5 million) and USD 4.6 million (and a credit line of USD 11 million granted by the Bank of Communications) from Goldsland and VGL.
Another round of borrowings allegedly occurred in late 2011 where Guangxin Group had extended to Vermont a credit facility of up to USD 37 million to the latter as working capital.
Li claims the above debt is owned by Vermont, while both Poh and Koh claim the loan agreement is not genuine or accurate.
CPIB Investigations and alleged breach of Director’s duties
Vermont UM Bunkering had its bunker supplier and bunker craft operator licence revoked by the Maritime and Port Authority of Singapore (MPA) on 28 April, 2016.
Poh, Koh, Lee Kok Leong (Vermont’s former bunker manager), Yang, and Mac Xing Tao (Mac) (Vermont’s then-financial controller) were charged, among other things, for cheating and criminal breach of trust.
Despite the revocation of the MPA Licence, Poh claimed Vermont could still operate by chartering its vessels. However, Yang decided to unilaterally close all of Vermont’s open trade positions at a significant loss, and Poh and Koh only found out about this on 29 June 2016 at a meeting in Hong Kong.
Poh claimed Yang’s actions were a breach of his duties to act in Vermont’s best interest and prevented Vermont from using its revenue stream to sustain its operations and reduce any debt owed to third parties.
In early July 2016, Yang and Mac disappeared.
Around September or October 2016, Yang was removed as a director of Vermont and replaced by Zou Bin, who was the director and chief executive of Goldsland. Poh claimed Zou Bin refused to engage Poh and Koh on continuing Vermont’s business.
Dispute of total USD 40.8 million claim from Goldsland and Sin Hua
Goldsland and Sin Hua, meanwhile, each launched legal suits against Vermont on 12 March 2018 to respectively recover loans of USD 22.4 million (exact: USD 22,443,995.61) and USD 18.4 million (exact: USD 18,360,759.33) on the basis that they had provided financial assistance to Vermont for bunkering transactions between 2010 and 2016.
The Hong Kong firms alleged Vermont requested them to transfer the monies directly to Vermont’s suppliers, which they did, and both companies obtained the Default Judgments against Vermont on 23 March 2018.
Separately, on 22 January 2018, Goldsland commenced proceedings in Hong Kong against Poh and Koh for USD 9.4 million (exact: USD 9,433,013.27) each.
Goldsland claimed that, from 21 April 2010 to 10 December 2013, it made payments of USD 34.0 million (exact: USD 34,002,094.98) on Vermont’s behalf to suppliers; and, on 20 June 2016, it made payments of USD 4.5 million (exact: USD 4,500,000) on Vermont’s behalf to the Bank of China. The Applicants signed the Counter-Guarantees in respect of these loans and were thus personally liable for 24.5% of the loan amounts each.
*Section 216A of the Companies Act (Cap. 50) allows any member of a company “to apply to the Court for leave to bring an action or arbitration in the name and on behalf of the company or intervene in an action or arbitration to which the company is a party for the purpose of prosecuting, defending or discontinuing the action or arbitration on behalf of the company,” according to Singapore Statutes Online.
The full 57-page judgement from the High Court of the Republic of Singapore is available for download and inspection here.
A record of earlier developments leading to the current case has been compiled below:
Related: Vermont UM Bunkering makes winding up application at Singapore High Court
Related: Singapore-based Vermont UM Bunkering directors, staff charged for fraud
Related: Bank seeks $38 million from arrested Singapore bunker tankers
Related: Singapore: Four bunker tankers arrested
Related: Goldsland Holdings moves in to secure US $22 million from Vermont UM Bunkering
Related: Vermont UM Bunkering Directors plan to defend claims from Hong Kong firms
Photo credit: Manifold Times
Published: 13 July, 2020
Winding up1 week ago