DASIN RETAIL TRUST MANAGEMENT PTE. LTD.

Case Details

• Citation: [2025] SGHC 6
• Court: General Division of the High Court
• Decision Date: 13 January 2025
• Coram: Kristy Tan JC
• Case Number: Originating Application No 1257 of 2024
• Hearing Date(s): 2 January 2025
• Applicant: Dasin Retail Trust Management Pte. Ltd.
• Counsel for Applicant: Chew Xiang, Priscilla Soh and Alicia Tan (Rajah & Tann Singapore LLP)
• Practice Areas: Companies; Schemes of arrangement; Business trusts; Insolvency and restructuring

Summary

The decision in [2025] SGHC 6 represents a significant clarification of the restructuring landscape for business trusts in Singapore. The High Court was tasked with determining whether a trustee-manager of a registered business trust could invoke the moratorium protections under Section 64 of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) in respect of liabilities incurred in its capacity as trustee-manager. The applicant, Dasin Retail Trust Management Pte. Ltd. ("DRTM"), sought a moratorium to facilitate a scheme of arrangement intended to restructure substantial debts arising from multiple syndicated loan facilities. These facilities were central to the operation of Dasin Retail Trust ("DRT"), a business trust listed on the SGX-ST with retail mall assets in China.

The core legal challenge arose from the unique legal structure of a business trust. Unlike a company, a business trust is not a separate legal entity; rather, the trustee-manager acts as the legal principal in all transactions. A minority shareholder and creditor, Zhang Zhencheng ("ZZC"), opposed the application, arguing that the IRDA’s scheme of arrangement and moratorium provisions were inapplicable to business trusts and that the application constituted an abuse of process. The Court rejected these arguments, holding that DRTM, as a Singapore-incorporated company, fell squarely within the definition of a "company" under Part 5 of the IRDA, regardless of the capacity in which it incurred the relevant liabilities.

Furthermore, the Court addressed the substantive requirements for a moratorium, including the "good faith" requirement and the "reasonable prospect" of a successful restructuring. Despite a backdrop of intense shareholder disputes and parallel winding-up proceedings, the Court found that DRTM had demonstrated a sufficient degree of creditor support and a viable restructuring plan. The judgment emphasizes that the statutory framework for schemes of arrangement is sufficiently flexible to accommodate the commercial realities of business trusts, provided the trustee-manager meets the requisite disclosure standards and demonstrates a bona fide intent to restructure.

Ultimately, the Court granted the moratorium, albeit with additional disclosure requirements to ensure transparency for the creditors. This decision confirms that the IRDA provides a robust mechanism for the restructuring of business trust debts, ensuring that the insolvency regime remains responsive to complex investment structures prevalent in the Singapore capital markets. It reinforces the principle that the trustee-manager, as the legal debtor, is the appropriate party to seek statutory protection when the trust's financial viability is at stake.

Timeline of Events

1. 23 December 2016: DRTM, acting as trustee-manager of DRT, enters into the IPO Offshore Facility as borrower.
2. 16 January 2020: DRTM enters into the Shunde Facilities to finance further acquisitions.
3. 2021: DRTM enters into the Luso Facility, denominated in US dollars.
4. 31 December 2021: Date relevant to financial reporting and the onset of liquidity challenges.
5. 10 January 2023: Internal disputes and management challenges begin to manifest within the trust structure.
6. 5 March 2023: Further defaults or notices of default issued by lenders.
7. 14 February 2024: Notice of default and acceleration in respect of the offshore facilities.
8. 5 March 2024: Formal demand for repayment of outstanding sums under the syndicated facilities.
9. 22 May 2024: Commencement of related legal proceedings or statutory demands by creditors.
10. 30 June 2024: The offshore and onshore facilities are confirmed to be in default.
11. 21 August 2024: Filing of winding-up applications against DRTM by certain creditors.
12. 30 September 2024: Reference date for the list of unsecured creditors provided in the moratorium application.
13. 12 November 2024: Further procedural steps in the winding-up proceedings (CWU 133).
14. 19 November 2024: Hearing or filing related to the stay of proceedings.
15. 26 November 2024: Deadline for certain creditor responses regarding the restructuring proposal.
16. 2 December 2024: DRTM files Originating Application No 1257 of 2024 seeking a moratorium under s 64 IRDA.
17. 19 December 2024: Filing of supplementary affidavits by the parties.
18. 23 December 2024: Further evidence submitted regarding creditor support levels.
19. 2 January 2025: Substantive hearing of OA 1257 before Kristy Tan JC.
20. 13 January 2025: Judgment delivered granting the moratorium.

What Were the Facts of This Case?

DRTM is a Singapore-incorporated company serving as the trustee-manager of Dasin Retail Trust ("DRT"). DRT is a business trust registered under the Business Trusts Act 2004 and listed on the Mainboard of the SGX-ST. The trust's primary assets are retail malls located in the People's Republic of China, held through a complex structure of Singapore and Chinese subsidiaries. The ownership of DRTM is split between Zhang Zhencheng ("ZZC"), who holds 95% of the shares in Dasin Retail Trust Management Holding Pte. Ltd. (the sole shareholder of DRTM), and New Harvest Investments Limited ("New Harvest"), which holds the remaining 5% but maintains significant contractual rights.

The financial distress of the trust was rooted in several major financing arrangements. These included the "IPO Offshore Facility" (S$410.5m and US$13.1m), the "Doumen Facilities" (S$103.2m), and the "Shunde Facilities" (S$129.9m). Additionally, there were corresponding "Onshore Facilities" in China, such as the IPO Onshore Facility (S$389.5m) and the Shunde Onshore Facility (S$216.6m). By June 2024, these facilities were in default. The total outstanding debt was staggering, with the offshore facilities alone exceeding S$475.9m and the onshore facilities totaling approximately S$297m. A further "Luso Facility" of US$13.1m was also in default.

The restructuring effort was complicated by a bitter dispute between ZZC and Sino-Ocean Capital (the parent of New Harvest). This dispute led to attempts to remove DRTM as the trustee-manager and the commencement of multiple legal proceedings. ZZC, through his associate Sonny Tan, alleged that DRTM was "hopelessly insolvent" and that the moratorium application was an abuse of process designed to entrench current management. ZZC further argued that because the debts were incurred "qua trustee-manager," they could not be the subject of a scheme of arrangement under the IRDA, which he claimed was reserved for "corporate" debts.

DRTM's proposed restructuring involved a "Consolidated Scheme" that sought to address the liabilities of both the trustee-manager and the trust's subsidiaries. The plan included the potential sale of assets (the retail malls) and the injection of new capital. DRTM presented evidence that a significant majority of the "Offshore Lenders" (representing 75% to 95% of the debt in certain tranches) were supportive of the restructuring efforts, or at least had not moved to enforce their security. Conversely, ZZC and his related entities, who claimed to be creditors for S$150.3m and S$4.4m respectively, vehemently opposed the moratorium.

The Court also noted the procedural history involving CWU 133, a winding-up application filed by ZZC against DRTM. DRTM had sought to stay CWU 133 pending the outcome of the moratorium application. The financial position of DRTM was precarious; as of 31 December 2021, its audited financial statements showed a net liability position, and it relied heavily on management fees from the trust, which were not being fully paid due to the trust's own liquidity issues. The list of unsecured creditors provided by DRTM included 42.99% support for the moratorium from those who responded, while 53.06% (largely ZZC-linked) opposed it.

What Were the Key Legal Issues?

The application raised several novel and critical legal issues regarding the intersection of trust law and insolvency law in Singapore:

• Issue 1: Statutory Standing of a Trustee-Manager. Whether a trustee-manager of a registered business trust is a "company" within the meaning of Section 64 of the Insolvency, Restructuring and Dissolution Act 2018, particularly when the moratorium is sought in respect of liabilities incurred in its representative capacity.
• Issue 2: The Nature of "Trust Debts". Whether liabilities incurred by a trustee-manager "qua trustee-manager" constitute "liabilities of the company" that can be restructured via a scheme of arrangement under the IRDA.
• Issue 3: Abuse of Process and Good Faith. Whether the existence of a shareholder dispute and the "representative" nature of the debts rendered the application an abuse of process or demonstrated a lack of bona fides on the part of the applicant.
• Issue 4: Feasibility and Creditor Support. Whether the proposed restructuring plan had a "reasonable prospect" of success, given the opposition from a significant minority creditor (ZZC) and the complexity of the offshore/onshore debt structure.
• Issue 5: Disclosure Requirements. What level of disclosure is required from a trustee-manager when seeking a moratorium, especially concerning the distinction between its personal assets/liabilities and those held on trust.

How Did the Court Analyse the Issues?

The Court’s analysis began with the fundamental definition of a "company" under the IRDA. Kristy Tan JC noted that Section 64(1) of the Insolvency, Restructuring and Dissolution Act 2018 applies to a "company" that proposes or intends to propose a compromise or arrangement with its creditors. Under Section 63(3), "company" is defined by reference to Section 2(1), which includes any corporation liable to be wound up under the Act. The Court found that DRTM, being a company incorporated in Singapore, clearly fell within this definition. The Court rejected ZZC's argument that the IRDA did not contemplate schemes for business trusts, stating that the focus is on the legal entity (the trustee-manager) rather than the capacity in which it acted.

The Court then delved into the "trustee as principal" doctrine. Citing Lian Chee Kek Buddhist Temple v Ong Ai Moi and others [2024] 5 SLR 1213, the Court affirmed that a trustee acts as a principal and is personally liable for debts incurred in the course of the trust's business. Consequently, "trust creditors" are, in law, creditors of the trustee-manager itself. The Court relied on E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd [2013] 4 SLR 123 and the UK Supreme Court decision in Equity Trust (Jersey) Ltd v Halabi [2023] AC 877 to conclude that it is inaccurate to distinguish between "trust creditors" and "personal creditors" for the purpose of identifying the debtor. They are all creditors of the same legal person—DRTM.

"It follows from this basic principle that a trustee acts as principal and is personally liable for the debts it incurs in the course of the trust’s business... Consequently, it is inaccurate to speak of 'trust creditors' as if they are creditors of the trust itself; they are creditors of the trustee." (at [38])

Regarding the "abuse of process" argument, the Court distinguished Re Tantleff, Alan [2023] 3 SLR 250. While Tantleff held that the IRDA did not apply to a foreign individual trustee, it did not restrict the application of the Act to a corporate trustee-manager incorporated in Singapore. The Court held that the statutory language of the IRDA was broad enough to encompass all liabilities of a corporate debtor, regardless of whether those liabilities were incurred for the debtor's own benefit or in its capacity as a trustee. To hold otherwise would create a "legal vacuum" where business trust debts could never be restructured under the IRDA, a result the Court found commercially absurd.

On the issue of "good faith" and "feasibility," the Court applied the tests set out in Re IM Skaugen SE and other matters [2019] 3 SLR 979 and Re Pacific Andes Resources Development Ltd and other matters [2018] 5 SLR 125. The Court observed that at the initial stage of a moratorium application, the threshold is not "high." The applicant must show that the proposal is not "doomed to failure" and that there is a "reasonable prospect" that a compromise or arrangement will be acceptable to the creditors. The Court found that the support from the Offshore Lenders (who held the vast majority of the debt) was a "powerful factor" in favor of the moratorium. Even if ZZC's opposing vote could potentially block a scheme, the Court noted that the "cram-down" provisions under Section 70 of the IRDA might be available, or the scheme could be structured in a way that ZZC’s opposition is not determinative.

The Court also addressed the lack of detailed financial information. While acknowledging that DRTM’s disclosure was "not ideal," the Court followed Re Picotin Pte Ltd and other matters [2024] SGHC 156, noting that in the early stages of a restructuring, the Court should be realistic about the level of detail available. The Court was satisfied that DRTM had provided enough information to show that the intended restructuring was a "serious and bona fide" attempt to resolve the trust's financial difficulties. However, to protect creditors, the Court exercised its power under Section 64(4) to impose additional disclosure requirements, including the provision of monthly cash flow statements and updates on the progress of asset sales.

What Was the Outcome?

The Court granted the moratorium in favor of DRTM. The specific orders were as follows:

• Prayer 1: A moratorium was granted under Section 64(1)(a) of the IRDA, restraining the passing of any resolution for the winding up of DRTM and the appointment of any receiver or manager over its property.
• Prayer 3: The moratorium was extended to cover the commencement or continuation of any proceedings, execution, distress, or other legal process against DRTM, except with the leave of the Court.
• Duration: The moratorium was granted for a period of approximately four months, expiring on 30 April 2025, unless further extended.

The Court declined to make an order on Prayer 2 (which sought to restrain acts to enforce security) because DRTM admitted it had no secured creditors in its personal capacity, and the Offshore Lenders (who held security over trust assets) were largely supportive or had not indicated an intent to enforce in a manner that would disrupt the restructuring.

Crucially, the Court imposed "additional disclosure orders" to address the concerns raised by ZZC and to ensure that creditors were kept informed. These included:

1. The provision of monthly management accounts of DRTM and DRT to all known creditors.
2. The provision of a monthly cash flow statement for DRTM and DRT.
3. A detailed update on the status of the "Consolidated Scheme" and any negotiations with potential investors or asset purchasers.

The operative conclusion of the Court was stated as follows:

"I make an order in terms of Prayers 1 and 3 and make no order on Prayer 2 of OA 1257. I also make the additional disclosure orders set out at [70] above." (at [72])

Costs were reserved to be dealt with at a later stage, following the standard practice in moratorium applications where the restructuring is ongoing.

Why Does This Case Matter?

This judgment is a landmark for the Singapore restructuring and insolvency regime, particularly for the Real Estate Investment Trust (REIT) and Business Trust sectors. It provides judicial confirmation that the trustee-manager of a registered business trust can access the Section 64 IRDA moratorium framework. This is vital because business trusts are a common vehicle for large-scale infrastructure and real estate holdings in Singapore, and their restructuring requires a clear legal pathway.

The decision reinforces the "entity-based" approach to the IRDA. By focusing on the fact that DRTM is a "company" under the Act, the Court avoided a restrictive interpretation that would have excluded representative liabilities from the scope of a scheme of arrangement. This aligns Singapore law with the commercial reality that a trustee-manager is the sole legal gateway to the trust's assets and liabilities. If the trustee-manager cannot seek a moratorium, the trust's assets could be subject to fragmented enforcement actions, destroying value for all stakeholders.

Furthermore, the case clarifies the application of the "good faith" test in the context of shareholder warfare. The Court demonstrated that it will not allow internal management disputes to automatically derail a restructuring effort if there is evidence of broader creditor support. The reliance on the "Offshore Lenders'" support shows that the Court will prioritize the views of the economic stakeholders (the creditors) over the tactical objections of dissenting shareholders.

For practitioners, the case highlights the importance of the "trustee as principal" doctrine. It serves as a reminder that when drafting schemes of arrangement for business trusts, the scheme must be proposed by the trustee-manager as the legal debtor. The judgment also provides a roadmap for the level of disclosure required in such complex cases, suggesting that while the initial threshold is low, the Court will use its power to impose ongoing reporting obligations to maintain transparency.

Finally, the decision touches upon the "cram-down" mechanism. By suggesting that a scheme could potentially be approved despite the opposition of a creditor like ZZC, the Court signaled its willingness to support value-maximizing restructurings even in the face of significant minority dissent. This provides a powerful tool for trustee-managers facing "hold-out" creditors in a restructuring scenario.

Practice Pointers

• Capacity is Secondary to Entity Status: When filing for a moratorium under s 64 IRDA, the primary focus should be on whether the applicant is a "company" as defined in the Act. The fact that liabilities were incurred as a trustee-manager does not disqualify the entity from seeking relief.
• Evidence of Creditor Support is Paramount: In the face of opposition, evidence of support from major lenders (like the 75-95% support from Offshore Lenders here) is the most effective way to demonstrate "reasonable prospect" and "good faith."
• Anticipate Disclosure Orders: In complex trust structures, practitioners should be prepared for the Court to order disclosure of both the trustee-manager's personal finances and the trust's consolidated financial position.
• Address the "Trustee as Principal" Doctrine: Legal submissions should clearly articulate that trust creditors are legal creditors of the trustee-manager to avoid "abuse of process" challenges based on capacity.
• Distinguish Tantleff: If representing a corporate trustee, be ready to distinguish Re Tantleff by emphasizing the Singapore incorporation of the debtor and the specific definitions in Part 5 of the IRDA.
• Strategic Use of Section 70: Consider the potential for a "cram-down" early in the process if a significant minority creditor is expected to oppose the scheme.
• Interplay with Winding-Up: A moratorium application is a valid basis to seek a stay of pending winding-up proceedings (like CWU 133), provided the moratorium requirements are met.

Subsequent Treatment

As of the date of this analysis, [2025] SGHC 6 stands as a recent and authoritative precedent on the eligibility of trustee-managers for IRDA moratoriums. It follows the developmental trajectory of Singapore's insolvency laws, building on the principles established in IM Skaugen and Pacific Andes. It has not yet been considered or distinguished by the Court of Appeal, but it provides a clear framework that is likely to be followed in future restructurings involving S-REITs and business trusts. The case is currently cited for its pragmatic approach to the "reasonable prospect" test at the initial moratorium stage.

Legislation Referenced

• Insolvency, Restructuring and Dissolution Act 2018 (Section 64, Section 2, Section 63, Section 70, Section 71)
• Business Trusts Act 2004
• Companies Act 1967 (Section 210)
• International Arbitration Act 1994 (Section 6)
• Securities and Futures Act 2001
• Finance Companies Act 1967 (Section 6)

Cases Cited

• Referred to: [2024] SGHC 156 (Re Picotin Pte Ltd and other matters)
• Referred to: [2015] SGHC 322 (Re Conchubar Aromatics Ltd and other matters)
• Referred to: [2024] 5 SLR 1213 (Lian Chee Kek Buddhist Temple v Ong Ai Moi and others)
• Referred to: [2013] 4 SLR 123 (E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd)
• Referred to: [2023] 3 SLR 250 (Re Tantleff, Alan)
• Referred to: [2023] 5 SLR 1421 (Re All Measure Technology (S) Pte Ltd)
• Referred to: [2019] 3 SLR 979 (Re IM Skaugen SE and other matters)
• Referred to: [2018] 5 SLR 125 (Re Pacific Andes Resources Development Ltd and other matters)
• Referred to: [2023] AC 877 (Equity Trust (Jersey) Ltd v Halabi)
• Referred to: (2019) 368 ALR 390 (Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth and others)

Source Documents

• Full Judgment PDF (Litt Law CDN)
• Original Judgment on eLitigation