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Business Times
4 days ago
- Business
- Business Times
Allen Law breached fiduciary duties as director of Park Hotel Management, High Court rules
[SINGAPORE] Businessman and hotelier Allen Law breached his fiduciary duties owed to his company Park Hotel Management (PHMPL) which is now in liquidation, a Singapore High Court judge ruled on Wednesday (Aug 6). 'When his company was in financial peril, he transferred its viable assets and businesses (effectively) to himself at a gross undervalue and manipulated the books of the company to eliminate receivables owed by him and his entities, leaving the creditors with nothing,' said Justice Hri Kumar Nair. Law had transferred all of PHMPL's valuable assets to three companies under his control in March 2021; in doing so, the founder of Park Hotel Group did the opposite of what the law demands, Justice Nair said. 'Law showed contempt for his fiduciary obligations – his breaches are beyond peradventure. While PHMPL may have failed because of events beyond his control, his response was entirely regrettable. He appropriated PHMPL's assets for himself and manipulated PHMPL's books to hide his subterfuge,' the judge said. ' His conduct, both in relation to the 'restructuring' and his defence of these proceedings, was dishonest and dishonourable. ' — Justice Hri Kumar Nair 'His conduct, both in relation to the 'restructuring' and his defence of these proceedings, was dishonest and dishonourable. His first and only thought was to benefit himself.' As a result of the Covid-19 pandemic, the tourism, hospitality and F&B industries suffered greatly, Justice Nair noted. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up At first, PHMPL's subsidiaries, Park Hotel CQ (PHCQ) and Grand Park OR (GPOR), received temporary relief under the Covid-19 (Temporary Measures) Act from their contractual obligations to pay rent. PHCQ operated the Park Hotel Clarke Quay, while GPOR ran the Grand Park Orchard hotel. However, by November 2020, when the Covid-19 relief ended, PHCQ and GPOR's positions had deteriorated further, Justice Nair said. 'No solution was in sight… Mr Law knew that PHCQ and GPOR were doomed.' The landlord of GPOR, an entity known as NPP which is linked to Chinese businessman Du Shuanghua's Bright Ruby Resources, 'consistently rejected' Law's requests to revise the terms of its lease. Said Justice Nair: 'While there were some negotiations with Ascendas Hospitality Reit (ART) to adjust the rent and security deposit under Park Hotel Clarke Quay's lease, nothing materialised.' On Feb 17, 2021, PHMPL's financial controller Tang Buck Kiaw provided Law with calculations that showed both PHCQ and GPOR were expected to incur significant net losses in 2021 if the group's subsequent application for Covid-19 relief were denied. Just days later, on Feb 20, NPP issued a letter of demand to GPOR for S$1.4 million, which triggered immediate action from Law. On Feb 22, Law wrote to Tang in an e-mail, saying: 'Sounds like we have to proceed with the restructuring.' 'That 'restructuring' was the genesis of these proceedings,' Justice Nair said. The restructuring plan The first part of the restructuring was PHMPL's disposal of its assets to companies linked to Law via four written agreements, the judge said. The agreements, all dated around March 2021, resulted in PHMPL transferring several hotel management agreements; the 'Park Hotel' and 'Grand Park' brands; 135 trademarks and the holding company behind Yan restaurant and the Smoke & Mirrors bar; as well as a training academy called Singapore Institute of Hospitality, to the three companies which were ultimately owned by Law. All of PHMPL's assets, excluding PCHQ and GPOR, were transferred for a total sum of S$3.4 million and US$40,000. 'The restructuring… was in essence a plan to move PHMPL's revenue-generating assets to the defendant companies, (that is,) to himself; eliminate all liabilities owed to PHMPL by him and entities owned by him; and leave PHMPL a shell carrying only substantial liabilities,' Justice Nair said. Evidence has established that Law 'orchestrated the restructuring with Tang as his trusted aide', the judge added. Almost immediately after receiving the Feb 22, 2021, e-mail, Tang responded, asking Law: 'Who can I talk to (in order) to get this started quickly?' On the same day, Law prepared a chart setting out the new structure of the business, Justice Nair said. 'It is evident that the purpose of the restructuring was to protect PHMPL's assets from its creditors. 'Law's plan was in fact summarised in Tang's e-mail to him… where she wrote: '(we) have to do it such that (NPP and ART have) no chance to unwind.'' Tang admitted under cross-examination that she meant that she wanted to complete the transfer of assets and businesses to Law's companies so that the creditors could not unwind them. She also admitted that '(there) was a sense of urgency' because it was only a matter of time before creditors would be at the door, Justice Nair said. In June 2021, NPP filed an application to wind up PHMPL, with the company entering into liquidation on Jul 2 . When was Park Hotel insolvent? One of the key issues that arose in this case was when Park Hotel Management became insolvent. Singapore's Insolvency, Restructuring and Dissolution Act considers that if a company enters into undervalued transactions within a three-year period before it is wound up, liquidators can apply to the court to recover assets that have been transferred to another party. Justice Nair said that when he heard parties in court, Law's legal team accepted that PHMPL was insolvent by March 2021. 'They departed from that position in their closing submissions and adopted Law's evidence at trial where he maintained that PHMPL still had a viable business even after the completion of the agreements.' The test for insolvency is whether the company's current assets exceed liabilities within a 12-month timeframe. Justice Nair said there was 'no doubt that PHCQ and GPOR were insolvent or financially parlous as at December 2020.' In any event, PHMPL was insolvent at the latest by Feb 20, 2021, when NPP issued the demand for S$1.4 million, as it was 'indisputable' that the corporate guarantees would shortly be called on given that GPOR had 'neither the means nor the intention' of meeting those demands. In analysing the evidence provided by the defence's valuation expert on the value of PHMPL's assets, Justice Nair said that his analysis was 'affected by other material and adjustments he had made, which were highly selective and problematic'. Notably, Justice Nair decided that the PHMPL trademarks were worth S$1.9 million, despite them being purchased by Law's companies for just S$1. Backdating of transfers The second part of the plan, said Justice Nair, was to 'cause PHMPL to declare and backdate substantial dividends in Law's favour and to effect a series of transfers and set-offs in PHMPL's books, most of which were also backdated, to eliminate his and his entities' liabilities to PHMPL'. Around March 2021, Law got PHMPL to declare a S$22 million dividend in his favour, but backdated this to September 2020. The dividend was said to be repayment for a director's loan that Law had extended to PHMPL. During the trial, PHMPL's finance manager testified that Tang had instructed him to 'reduce or remove the account balances' and 'to look into accounts and see which are the ones that can be fully knocked off'. Another S$5.9 million was declared in favour of Law in April, after PHMPL's assets and businesses had been disposed of and PHMPL had no ability to earn revenue, Justice Nair said. Significantly, Tang expressly warned Law that declaring the $5.9 million dividend would be viewed as preference over creditors. The liquidators will have two weeks to file submissions on the reliefs they are seeking from Law and on costs. Law's legal team will have two weeks to respond. A representative of the defendants said: 'This remains a legacy matter arising from the exceptional circumstances of Covid-19 lockdowns in 2020 and their unprecedented impact on the hospitality sector. The judgment is being reviewed and appropriate next steps are being considered.' A team of lawyers, led by Allen & Gledhill's William Ong, represent the liquidators. Law and his companies are represented by lawyers from TSMP Law Corporation, led by Thio Shen Yi. Park Hotel Clarke Quay has since been rebranded as The Robertson House by The Crest Collection and is managed by The Ascott Limited. Grand Park Orchard Hotel is being operated as Pullman Singapore Orchard.
Singapore Law Watch
28-05-2025
- Business
- Singapore Law Watch
Judge okays bulk of $32.1m claim by Ascendas against defunct Park Hotel Clarke Quay operator
Judge okays bulk of $32.1m claim by Ascendas against defunct Park Hotel Clarke Quay operator Source: Straits Times Article Date: 28 May 2025 Author: Grace Leong The hotel was renamed Riverside Hotel Robertson Quay after CapitaLand unit AIMPL took over from August 2021 to September 2022. Ascendas Hospitality Reit (AH-Reit), the landlord of the former Park Hotel Clarke Quay property in Unity Street, was allowed to claim the bulk of a $32.1 million sum for unpaid rent and other charges against the defunct former operator Park Hotel CQ (PHCQ) under a High Court ruling on May 23. High Court Justice Audrey Lim reduced AH-Reit's proof of debt to $31.1 million, after excluding $273,792 in property tax from Oct 1, 2022, to June 27, 2023, and costs totalling $679,454. PHCQ was wound up by the High Court on Nov 19, 2021. This came after AH-Reit terminated its master lease with PHCQ on Aug 28, 2021, and took possession of the property after the hotel operator failed to pay $5.92 million in debt. The hotel was then renamed Riverside Hotel Robertson Quay after CapitaLand unit Ascott International Management (AIMPL) took over from August 2021 to September 2022. It was subsequently rebranded as The Robertson House by The Crest Collection, which opened in October 2023. The $32.1 million claim comprises unpaid rent by PHCQ, charges payable during the handover of the property, property tax and other costs. About $25 million of the claim was disputed by another PHCQ creditor, Park Hotel Group Management (PHGM). PHGM is owned by British Virgin Islands-incorporated Good Movement Holdings which is, in turn, owned by Mr Allen Law Ching Hung, the son of Hong Kong-based billionaire Law Kar Po. Mr Allen Law was also the sole director and chief executive of PHCQ from April 3, 2013, until March 16, 2021, when he stepped down. The $32.1 million claim includes a claim for net rent of $20.4 million for the remainder of the lease from Aug 28, 2021, to June 27, 2023. This comprises $27.2 million of rent, minus $8.2 million plus GST, the income earned by AH-Reit during that period to reduce its rental losses from PHCQ's early termination. PHGM argued that the liquidators had accepted the $8.2 million earned income figure without properly considering if AH-Reit had taken adequate measures to reduce its rental losses and whether it was reasonable to allow AIMPL, an entity related to AH-Reit, to operate the property from Aug 28, 2021, to Sept 29, 2022. PHGM added that, instead of leasing the property to an independent third party, AH-Reit had subsequently entered into a related-party transaction with Ascott Hospitality Business Trust (AHBT) from Oct 1, 2022 onwards, with AIMPL continuing to manage the property. But Justice Lim ruled that she did not find the arrangement 'unreasonable', and said the liquidators of PHCQ had 'properly' accepted AH-Reit's claim pertaining to $20.4 million in unpaid rent. Furthermore, she agreed with the liquidators that it was speculative to assume that AH-Reit could have found another tenant willing to pay a higher rent. 'The property was essentially a hotel and the remaining duration of the lease, had it not been terminated, was short. At the time, Singapore was also just emerging from the Covid-19 pandemic,' said Justice Lim. It is unclear how AH-Reit would have been able to find another tenant that would have been willing to take over the property's lease and run the hotel, she added. Although the judge ruled it was reasonable for AH-Reit to lease the property to AHBT from Oct 1, 2022, onwards, she reduced the claims for property tax incurred by AH-Reit for the period from Oct 1, 2022, to June 27, 2023. 'Neither AH-Reit nor the liquidators have explained why AH-Reit did not impose the obligation to pay property tax on AHBT under the AHBT lease, nor why the tax was borne by AH-Reit,' she noted. 'That the AHBT lease did not include an obligation on AHBT to bear the property tax is to be contrasted with the lease wherein PHCQ bore such an obligation,' she said. 'AH-Reit appears to have treated AHBT more favourably (compared with PHCQ) by not imposing an obligation on AHBT to pay property tax, only to then claim the property tax from PHCQ instead.' She pointed out that the liquidators' acceptance of AH-Reit's property tax claim, made seemingly without any scrutiny, was unsatisfactory. However, Justice Lim allowed the claim for $2.4 million in charges payable for the handover of the property from July 1, 2021, to Aug 27, 2021. PHGM had disputed the claim, saying there was no explanation for why the handover of the property by PHCQ to AH-Reit took nearly two months when it could have been done in a day, and why the lease was terminated on Aug 28, 2021. The liquidators argued that 'to ensure a proper handover, sufficient time was needed for AH-Reit to get information on the hotel operations and for PHCQ to prepare the asset listing and liaise with various parties on the novation or termination of its existing contracts'. PHCQ also had an agreement with the Singapore Land Authority during the pandemic to operate the property as a government quarantine facility (GQF) until Aug 27, 2021. Hence, it was not unreasonable for AH-Reit to defer the property handover until it had obtained the licences or approvals to operate the property as a GQF if this would enable the property to generate a steady stream of income and reduce the amounts payable by PHCQ, the judge ruled. Furthermore, PHCQ and AIMPL had to work with the National Trades Union Congress to ensure a smooth handover of employees. 'I am satisfied that the two-month handover period was not objectionable,' the judge ruled. Source: The Business Times © SPH Media Limited. 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Straits Times
27-05-2025
- Business
- Straits Times
Judge Oks bulk of $32.1 million claim against defunct Park Hotel Clarke Quay operator
The hotel was renamed Riverside Hotel Robertson Quay after CapitaLand unit AIMPL took over from August 2021 to September 2022. PHOTO: ST FILE SINGAPORE – Ascendas Hospitality Reit (AH-Reit), the landlord of the former Park Hotel Clarke Quay property in Unity Street, was allowed to claim the bulk of a $32.1 million sum for unpaid rent and other charges against the defunct former operator Park Hotel CQ (PHCQ) under a High Court ruling on May 23. High Court Justice Audrey Lim reduced AH-Reit's proof of debt to $31.1 million, after excluding $273,792 in property tax from Oct 1, 2022, to June 27, 2023, and costs totalling $679,454. PHCQ was wound up by the High Court on Nov 19, 2021. This came after AH-Reit terminated its master lease with PHCQ on Aug 28, 2021, and took possession of the property after the hotel operator failed to pay $5.92 million in debt. The hotel was then renamed Riverside Hotel Robertson Quay after CapitaLand unit Ascott International Management (AIMPL) took over from August 2021 to September 2022. It was subsequently rebranded as The Robertson House by The Crest Collection, which opened in October 2023. The $32.1 million claim comprises unpaid rent by PHCQ, charges payable during the handover of the property, property tax and other costs. About $25 million of the claim was disputed by another PHCQ creditor Park Hotel Group Management (PHGM). PHGM is owned by British Virgin Islands-incorporated Good Movement Holdings which is, in turn, owned by Mr Allen Law Ching Hung, the son of Hong Kong-based billionaire Law Kar Po. Mr Allen Law was also the sole director and chief executive of PHCQ from April 3, 2013 until March 16, 2021, when he stepped down. The $32.1 million claim includes a claim for net rent of $20.4 million for the remainder of the lease from Aug 28, 2021 to June 27, 2023. This comprises $27.2 million of rent, minus $8.2 million plus GST, the income earned by AH-Reit during that period to reduce its rental losses from PHCQ's early termination. PHGM argued that the liquidators had accepted the $8.2 million earned income figure without properly considering if AH-Reit had taken adequate measures to reduce its rental losses and whether it was reasonable to allow AIMPL, an entity related to AH-Reit, to operate the property from Aug 28, 2021, to Sept 29, 2022. PHGM added that, instead of leasing the property to an independent third party, AH-Reit had subsequently entered into a related-party transaction with Ascott Hospitality Business Trust (AHBT) from Oct 1, 2022 onwards, with AIMPL continuing to manage the property. But Justice Lim ruled that she did not find the arrangement 'unreasonable', and said the liquidators of PHCQ had 'properly' accepted AH-Reit's claim pertaining to $20.4 million in unpaid rent. Furthermore, she agreed with the liquidators that it was speculative to assume that AH-Reit could have found another tenant willing to pay a higher rent . 'The property was essentially a hotel and the remaining duration of the lease, had it not been terminated, was short. At the time, Singapore was also just emerging from the Covid-19 pandemic,' said Justice Lim. It is unclear how AH-Reit would have been able to find another tenant that would have been willing to take over the property's lease and run the hotel, she added. Although the judge ruled it was reasonable for AH-Reit to lease the property to AHBT from Oct 1, 2022 onwards, she reduced the claims for property tax incurred by AH-Reit for the period from Oct 1, 2022 to June 27, 2023. 'Neither AH-Reit nor the liquidators have explained why AH-Reit did not impose the obligation to pay property tax on AHBT under the AHBT lease, nor why the tax was borne by AH-Reit,' she noted. 'That the AHBT lease did not include an obligation on AHBT to bear the property tax is to be contrasted with the lease wherein PHCQ bore such an obligation,' she said. 'AH-Reit appears to have treated AHBT more favourably ( compared with PHCQ) by not imposing an obligation on AHBT to pay property tax, only to then claim the property tax from PHCQ instead.' She pointed out that the liquidators' acceptance of AH-Reit's property tax claim, made seemingly without any scrutiny, was unsatisfactory. However, Justice Lim allowed the claim for $2.4 million in charges payable for the handover of the property from July 1, 2021 to Aug 27, 2021. PHGM had disputed the claim, saying there was no explanation for why the handover of the property by PHCQ to AH-Reit took nearly two months when it could have been done in a day, and why the lease was terminated on Aug 28, 2021. The liquidators argued that 'to ensure a proper handover, sufficient time was needed for AH-Reit to get information on the hotel operations and for PHCQ to prepare the asset listing and liaise with various parties on the novation or termination of its existing contracts'. PHCQ also had an agreement with the Singapore Land Authority during the pandemic to operate the property as a government quarantine facility (GQF) until Aug 27, 2021. Hence, it was not unreasonable for AH-Reit to defer the property handover until it had obtained the licences or approvals to operate the property as a GQF if this would enable the property to generate a steady stream of income and reduce the amounts payable by PHCQ, the judge ruled. Furthermore, PHCQ and AIMPL had to work with the National Trades Union Congress to ensure a smooth handover of employees. 'I am satisfied that the two-month handover period was not objectionable,' the judge ruled. 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