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Singapore Law Watch
6 days ago
- Business
- Singapore Law Watch
Park Hotel Management director breached fiduciary duty by selling assets to himself under value
Park Hotel Management director breached fiduciary duty by selling assets to himself under value Source: Straits Times Article Date: 07 Aug 2025 Author: Grace Leong The court has ruled that Allen Law transferred the viable assets and businesses of his company, Park Hotel Management, effectively to himself 'at a gross undervalue'. Mr Allen Law, the scion of Hong Kong-based billionaire Law Kar Po, was found to have breached his fiduciary duties and prejudiced the interests of creditors, while navigating his company Park Hotel Management (PHMPL) through financial challenges resulting from the Covid-19 pandemic. According to a 165-page High Court judgment released on Aug 6, Mr Law, the sole director and shareholder of PHMPL, sold assets to himself at 'gross undervalue' and diverted more than $32 million in cash and receivables for his benefit. 'When (Mr Law's) 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,' High Court Judge Hri Kumar Nair noted. 'Far from demonstrating selflessness, Mr Law showed contempt for his fiduciary obligations... 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. 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,' the judge said. Mr Law and three other companies were sued by PHMPL and its liquidators over matters relating to assets sold to entities related to him before the company was placed in liquidation in July 2021 in the wake of the pandemic, which had devastated the hospitality industry globally. The three defendant companies are Park Hotel Group Management (PHG), British Virgin Islands-incorporated Good Movement Holdings and Singapore Institute of Hospitality (SIOH). PHG and SIOH are owned by Good Movement, which in turn is owned by Mr Law, who is married to Ms Tan Shin Hui, granddaughter of former UOB chairman, the late Mr Wee Cho Yaw. She is the executive director of PHG. PHMPL was also the sole shareholder of hotel management company Park Hotel Management (Maldives), restaurant operator Yan and Park Hotel Affiliates (PHA). Due to plummeting occupancy rates and pandemic-related restrictions, Park Hotel CQ, operator of the former Park Hotel Clarke Quay property in Unity Street; and Grand Park OR, operator of the former Grand Park Orchard hotel, were unable to meet their lease obligations. Despite efforts to negotiate with landlords and seek relief under the Covid-19 (Temporary Measures) Act, PHMPL's financial position became increasingly precarious. A sale of PHMPL's assets was done in March 2021. But the liquidators said that PHMPL did not receive any consideration for the substantial assets it disposed of. This included a sum of $2.7 million for assets sold to PHG under an asset share and transfer agreement (ASTA) in March 2021. The assets included 12 hotel management agreements, licence agreements, business names, and PHMPL trademarks. The shareholdings in Park Hotel Maldives were purchased by PHG and Good Movement for US$40,000 (S$51,490), while the shareholding in Yan was purchased by Good Movement for $500,000, and the assets of the Singapore Institute of Hospitality were sold by PHMPL for $200,000. 'The effect of the agreements was that PHMPL's assets... were transferred to the defendant companies for a total sum of $3.4 million and US$40,000,' according to the judgment. 'But Mr Law... arranged it such that PHMPL did not even receive these sums,' Justice Nair said. Furthermore, the judge found that the market value of these assets amounted to $26.4 million and US$2.42 million. 'The transfer of assets and businesses from PHMPL to the defendant companies was only one part of Mr Law's plan. In the period when Park Hotel CQ and Grand Park OR were failing to meet their obligations under their respective leases, Mr Law extracted substantial amounts of cash from all three companies,' according to the ruling. In addition, Mr Law also breached the no-profit rule of the Companies Act when he diverted an opportunity to manage Park Hotel Kyoto to PHG, to the detriment of PHMPL. The second part of the plan, the judge found, 'was to cause PHMPL to declare and backdate substantial dividends in Mr 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.' Mr Law received cash payments from PHMPL and also diverted receivables of $22.3 million due from his related companies to PHMPL. These amounts were set off against dividend declarations of $22 million and $5.9 million, and an accounting entry of $6.75 million in his favour. But the judge found that the dividend declarations were invalid as PHMPL was insolvent at the time they were made. As a result, Mr Law must repay $10.1 million in cash payments and $22.3 million in receivables. 'Given my findings that PHMPL was at the very least financially parlous by 31 December 2020 and Mr Law knew this, the cash payments were not in the interests of PHMPL and amount to breaches of Mr Law's fiduciary duties to PHMPL,' Justice Nair said. A representative from the defendants said: 'This remains a legacy matter arising from the exceptional circumstances of Covid lockdowns in 2020 and their unprecedented impact on the hospitality sector. The judgment is being reviewed and appropriate next steps are being considered.' Allen & Gledhill partners William Ong and Lee Bik Wei are acting for the plaintiffs, while Mr Law and the three defendant companies are represented by TSMP Law's senior counsel Thio Shen Yi. Source: The Straits Times © SPH Media Limited. Permission required for reproduction. Park Hotel Management Pte Ltd (in liquidation) and others v Law Ching Hung and others [2025] SGHC 149 Print
Straits Times
7 days ago
- Business
- Straits Times
Park Hotel Management director breached fiduciary duty by selling assets to himself under value
Sign up now: Get ST's newsletters delivered to your inbox Mr Allen Law, the sole director and shareholder of PHMPL, sold assets to himself at 'gross undervalue' and diverted more than $32 million in cash and receivables for his benefit. SINGAPORE – Allen Law, the scion of Hong Kong-based billionaire Law Kar Po, was found to have breached his fiduciary duties and prejudiced the interests of creditors, while navigating his company Park Hotel Management (PHMPL) through financial challenges resulting from the Covid-19 pandemic. According to a 165-page High Court judgment released on Aug 6, Mr Law, the sole director and shareholder of PHMPL, sold assets to himself at 'gross undervalue' and diverted more than $32 million in cash and receivables for his benefit. 'When (Mr Law's) 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,' High Court Judge Hri Kumar Nair noted. 'Far from demonstrating selflessness, Mr Law showed contempt for his fiduciary obligations... 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. 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,' the judge said. Mr Law and three other companies were sued by PHMPL and its liquidators over matters relating to assets sold to entities related to him before the company was placed in liquidation in July 2021 in the wake of the pandemic, which had devastated the hospitality industry globally. The three defendant companies are Park Hotel Group Management (PHG), BVI-incorporated Good Movement Holdings and Singapore Institute of Hospitality (SIOH). PHG and SIOH are owned by Good Movement, which in turn is owned by Mr Law, who is married to Ms Tan Shin Hui, granddaughter of former UOB chairman, the late Mr Wee Cho Yaw. She is the executive director of PHG. PHMPL was also the sole shareholder of hotel management company Park Hotel Management (Maldives), restaurant operator Yan and Park Hotel Affiliates (PHA). Due to plummeting occupancy rates and pandemic-related restrictions, Park Hotel CQ, operator of the former Park Hotel Clarke Quay property in Unity Street; and Grand Park OR, operator of the former Grand Park Orchard hotel, were unable to meet their lease obligations. Despite efforts to negotiate with landlords and seek relief under the Covid-19 (Temporary Measures) Act, PHMPL's financial position became increasingly precarious. A sale of PHMPL's assets was done in March 2021. But the liquidators said that PHMPL did not receive any consideration for the substantial assets it disposed of. This included a sum of $2.7 million for assets sold to PHG under an asset share and transfer agreement (ASTA) in March 2021. The assets included 12 hotel management agreements, licence agreements, business names, and PHMPL trademarks. The shareholdings in Park Hotel Maldives were purchased by PHG and Good Movement for US$40,000 (S$51,490), while the shareholding in Yan was purchased by Good Movement for $ 500,000, and the assets of the Singapore Institute of Hospitality were sold by PHMPL for $ 200,000. 'The effect of the agreements was that PHMPL's assets... were transferred to the defendant companies for a total sum of $ 3.4 million and US$40,000,' according to the judgment. 'But Mr Law... arranged it such that PHMPL did not even receive these sums,' Justice Nair said. Furthermore, the judge found that the market value of these assets amounted to $ 26.4 million and US$2.42 million. 'The transfer of assets and businesses from PHMPL to the defendant companies was only one part of Mr Law's plan. In the period when Park Hotel CQ and Grand Park OR were failing to meet their obligations under their respective leases, Mr Law extracted substantial amounts of cash from all three companies,' according to the ruling. In addition, Mr Law also breached the no-profit rule of the Companies Act when he diverted an opportunity to manage Park Hotel Kyoto to PHG, to the detriment of PHMPL. The second part of the plan, the judge found, 'was to cause PHMPL to declare and backdate substantial dividends in Mr 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.' Mr Law received cash payments from PHMPL and also diverted receivables of $ 22.3 million due from his related companies to PHMPL. These amounts were set off against dividend declarations of $ 22 million and $ 5.9 million, and an accounting entry of $ 6.75 million in his favour. But the judge found that the dividend declarations were invalid as PHMPL was insolvent at the time they were made. As a result, Mr Law must repay $ 10.1 million in cash payments and $ 22.3 million in receivables. 'Given my findings that PHMPL was at the very least financially parlous by 31 December 2020 and Mr Law knew this, the cash payments were not in the interests of PHMPL and amount to breaches of Mr Law's fiduciary duties to PHMPL,' Justice Nair said. A representative from the defendants said: 'This remains a legacy matter arising from the exceptional circumstances of Covid lockdowns in 2020 and their unprecedented impact on the hospitality sector. The judgment is being reviewed and appropriate next steps are being considered.' Allen & Gledhill partners William Ong and Lee Bik Wei are acting for the plaintiffs, while Mr Law and the three defendant companies are represented by TSMP Law's senior counsel Thio Shen Yi.
Singapore Law Watch
27-05-2025
- Business
- Singapore Law Watch
Park Hotel Management and Allen Law's legal battle results in landmark High Court judgment for insolvency law
Park Hotel Management and Allen Law's legal battle results in landmark High Court judgment for insolvency law Source: Business Times Article Date: 27 May 2025 Author: Jessie Lim In a related claim, CapitaLand unit Ascendas Hospitality Reit, another Park Hotel creditor, will not be able to recover the full sum it seeks from liquidators. Former Park Hotel Management (PHMPL) director Allen Law, who is being sued by liquidators of the company, has failed to reduce his potential liabilities by S$6.8 million after the High Court rejected his application to amend his defence and introduce a counterclaim. In a landmark judgment last year, Justice Goh Yihan dismissed Law's application on the basis that the counterclaims Law sought to introduce did not fall within the scope of insolvency set-offs. Justice Goh ruled that insolvency set-offs are the only form of set-offs that can be advanced against an insolvent company without requiring permission from the court. This is the first time a court in Singapore has authoritatively addressed the legal issue of what kind of set-offs are available against an insolvent company. An insolvency set-off is a mechanism by which a company's debt is cancelled out or reduced by the amount the other party owes, if the company goes into liquidation. There are also legal and equitable set-offs but these are not provided for in the Singapore statutes. In his application, Law claimed that the S$6.8 million included S$4.3 million, which he paid to UOB as a guarantor of a loan extended by the bank to PHMPL, and S$2.5 million, which was paid to discharge PHMPL's debts. Since 2022, the liquidators of PHMPL and Law have been embroiled in several related court cases over the disposal of assets sold to entities related to Law before PHMPL was placed into liquidation. The main case pertains to whether Law transferred virtually all of PHMPL's assets to himself and three companies under his control, in undervalued transactions or in breach of Law's duties as a director. 'The effect of these transactions was allegedly to substantially reduce the sums available for distribution amongst PHMPL's creditors in the event of its liquidation,' Justice Goh said. While a verdict has yet to be delivered for the main case, in dismissing Law's application to introduce a counterclaim, Justice Goh said that because the claims against the defendants were based on the defendants' 'wrongdoing', the claims do not satisfy the requirement of mutual dealings required for insolvency set-offs. In their suit, PHMPL's liquidators allege that Law committed breach of fiduciary duty, breach of trust and conspiracy through unlawful means. Citing English case law, Justice Goh said: 'There is no set-off available between a debt due to a misfeasant and his liability to repay the monies which he has been ordered to pay in misfeasance proceedings.' He pointed out how English legal scholar Roy Goode said: 'Any other conclusion would enable the wrongdoer to benefit from his wrongdoing by recovery through set-off instead of having to prove in the winding-up in competition with other creditors.' In another judgment released last Friday (May 23), High Court Judge Audrey Lim ruled that another of PHMPL's creditors, the trustee of Ascendas Hospitality Reit (AH-Reit), will not be able to claim the full amount it is seeking from PHMPL's subsidiary PHCQ, which is also in liquidation. This was after Park Hotel Group Management, one of Law's companies, challenged how AH-Reit had derived its claim for over S$562,400 in property tax it was seeking from the liquidators. AH-Trust, the stapled entity which comprised AH-Reit and Ascendas Hospitality Business Trust, has since combined with Ascott Residence Trust to form what is known today as CapitaLand Ascott Trust. AH-Reit was the landlord of the former Park Hotel Clarke Quay property at Unity Street leased by PHCQ. AH-Reit sought to claim, among other costs, rental and property tax payable from August 2021 to June 2023. PHCQ stopped paying rent in 2020, which resulted in AH-Reit terminating its lease in August 2021 and repossessing the property after PHCQ failed to pay around S$5.92 million in rent. From August 2021 to September 2022, Ascott International Management (AIMPL), an entity related to AH-Reit, was appointed to manage the hotel. The building was leased to Ascott Hospitality Business Trust from October 2022, with AIMPL remaining as manager. The property is currently home to The Robertson House by The Crest Collection, which officially opened in October 2023. Under the lease, Ascott Hospitality Business Trust paid rent to AH-Reit while AH-Reit bore the property tax, Justice Lim noted. The judge said it was 'not unreasonable' for AH-Reit to have arranged for AIMPL to manage the property and that it was 'reasonable' for AH-Reit to lease the property to Ascott Hospitality Business Trust. However, she added: 'Neither AH-Reit nor the liquidators have explained why AH-Reit did not impose the obligation to pay property tax on Ascott Hospitality Business Trust.. Nor why the tax was borne by AH-Reit. 'That the Ascott Hospitality Business Trust lease did not include an obligation on Ascott Hospitality Business Trust to bear the property tax is to be contrasted with the lease wherein PHCQ bore such an obligation.' 'AH-Reit appears to have treated AHBT more favourably (compared to PHCQ) by not imposing an obligation on AHBT to pay property tax, only to then claim the property tax from PHCQ instead.' The liquidators' acceptance of AH-Reit's property tax claim, without any scrutiny it would seem, was unsatisfactory, Justice Lim said. As a result, the High Court judge reduced AH-Reit's proof of debt by S$273,792 in property tax it was claiming for the period from October 2022 to June 2023. She also ruled that some of the items the Reit sought to claim under costs for replacement had insufficient evidence to prove that they were remedial works that fell within PHCQ's obligations under its lease. Nanthini Vijayakumar from TSMP Law was the lead counsel representing Allen Law, while Allen & Gledhill's Lee Bik Wei and her team acted on behalf of the liquidators. The case continues. Source: The Business Times © SPH Media Limited. Permission required for reproduction. Print
Business Times
26-05-2025
- Business
- Business Times
Daily Debrief: What Happened Today (May 26)
Stories you might have missed Asean must strengthen external ties in new growth areas, even as integration continues: PM Wong [KUALA LUMPUR] Asean must deepen and expand its external partnerships, especially in new growth areas, even as it steps up its own internal integration, said Prime Minister Lawrence Wong on Monday (May 26). Asia's rich trim US exposure, head to Europe amid tariff turmoil [SINGAPORE] Asian private banking clients sprang into action over the past month, refusing to sit idle when faced with the whiplash in global financial markets caused by the tariff turmoil. Individuals have been rebalancing their portfolios, according to some senior private bankers, whose clients each have at least S$2 million in investible assets. Front-loading drives Singapore's factory output growth, which slows to 5.9% in April but far exceeds estimates BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up [SINGAPORE] Front-loading activity amid uncertainty over US President Donald Trump's tariffs supported Singapore's industrial production growth in April, economists said after the latest prints were released on Monday (May 26). Malaysia's Anwar writes Trump seeking summit with South-east Asia [KUALA LUMPUR] Malaysian Prime Minister Anwar Ibrahim said he has written a letter to United States President Donald Trump to request a meeting between the US and the Association of South-east Asian Nations over Washington's trade policies. Less than 75% of fresh graduates from private institutions secure jobs within 6 months [SINGAPORE] Fewer than three in four fresh graduates from private education institutions found employment within six months of graduation, based on the Private Education Institution Graduate Employment Survey 2023/2024 released by SkillsFuture Singapore on Monday. Park Hotel Management and Allen Law's legal battle results in landmark High Court judgment for insolvency law [SINGAPORE] Former Park Hotel Management director Allen Law, who is being sued by liquidators of the company, has failed to reduce his potential liabilities by S$6.8 million after the High Court rejected his application to amend his defence and introduce a counterclaim. Hillcrest Arcadia's S$920 million en bloc tender closes with no bids [SINGAPORE] The collective sale of Bukit Timah condominium Hillcrest Arcadia has moved into private treaty talks, after a tender closed on Thursday with no bids.
Business Times
26-05-2025
- Business
- Business Times
Park Hotel Management and Allen Law's legal battle results in landmark High Court judgment for insolvency law
[SINGAPORE] Former Park Hotel Management (PHMPL) director Allen Law Ching Hung, who is being sued by liquidators of the company, has failed to reduce his potential liabilities by S$6.8 million after the High Court rejected his application to amend his defence and introduce a counterclaim . In a landmark judgement last year, Justice Goh Yihan dismissed Law's application on the basis that the counterclaims Law sought to introduce did not fall within the scope of insolvency set-offs. Justice Goh ruled that insolvency set-offs are the only form of set-offs that can be advanced against an insolvent company without requiring permission from the court. This is the first time a court in Singapore has authoritatively addressed the legal issue of what kind of set-offs are available against an insolvent company. An insolvency set-off is a mechanism by which a company's debt is cancelled out or reduced by the amount the other party owes, if the company goes into liquidation. There are also legal and equitable set-offs but these are not provided for in the Singapore statutes. In his application, Law claimed that the S$6.8 million included S$4.3 million which he paid to UOB as a guarantor of a loan extended by the bank to PHMPL and S$2.5 million which was paid to discharge PHMPL's debts. 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 Since 2022, the liquidators of PHMPL and Law have been embroiled in several related court cases over the disposal of assets sold to entities related to Law before PHMPL was placed into liquidation. The main case pertains to whether Law transferred virtually all of PHMPL's assets to himself and three companies under his control, in undervalued transactions or in breach of Law's duties as a director. 'The effect of these transactions was allegedly to substantially reduce the sums available for distribution amongst PHMPL's creditors in the event of its liquidation,' Justice Goh said. While a verdict has yet to be delivered for the main case, in dismissing Law's application to introduce a counterclaim, Justice Goh said that because the claims against the defendants were based on the defendants' 'wrongdoing', the claims do not satisfy the requirement of mutual dealings required for insolvency set-offs. In their suit, PHMPL's liquidators allege that Law committed breach of fiduciary duty, breach of trust and conspiracy through unlawful means. Citing English case law, Justice Goh said: 'There is no set-off available between a debt due to a misfeasant and his liability to repay the monies which he has been ordered to pay in misfeasance proceedings'. He pointed out how in English legal scholar Sir Roy Goode said: 'Any other conclusion would enable the wrongdoer to benefit from his wrongdoing by recovery through set-off instead of having to prove in the winding-up in competition with other creditors.' In another judgement released last Friday (May 23), High Court Judge Audrey Lim ruled that another of PHMPL's creditors, the trustee of Ascendas Hospitality Reit (AH-Reit), will not be able to claim the full amount it is seeking from PHMPL's subsidiary PHCQ, which is also in liquidation. This was after Park Hotel Group Management, one of Law's companies, challenged how AH-Reit had derived its claim for over S$562,400 in property tax it was seeking from the liquidators. AH-Reit, which has since combined with Ascott Residence Trust to form what is known today as CapitaLand Ascott Reit, was the landlord of the former Park Hotel Clarke Quay property at Unity Street leased by PHCQ. AH-Reit sought to claim, amongst other costs, rental and property tax payable from August 2021 to June 2023. PHCQ stopped paying rent in 2020 which resulted in AH-Reit terminating its lease in August 2021 and repossessing the property after PHCQ failed to pay around S$5.92 million in rent. From August 2021 to September 2022, Ascott International Management (AIMPL), an entity related to AH-Reit, was appointed to manage the hotel. The building was leased to Ascott Hospitality Business Trust from October 2022, with AIMPL remaining as manager. The property is currently home to The Robertson House by The Crest Collection which officially opened in October 2023. Under the lease, Ascott Hospitality Business Trust paid rent to AH-Reit while AH-Reit bore the property tax, Justice Lim noted. The judge said she accepted that it was reasonable for AH-Reit to have arranged for AIMPL to manage the property and that it was reasonable for AH-Reit to lease the property to Ascott Hospitality Business Trust. However she added: 'Neither AH-Reit nor the liquidators have explained why AH-Reit did not impose the obligation to pay property tax on Ascott Hospitality Business Trust.. Nor why the tax was borne by AH-Reit. 'That the Ascott Hospitality Business Trust lease did not include an obligation on Ascott Hospitality Business Trust to bear the property tax is to be contrasted with the lease wherein PHCQ bore such an obligation.' 'AH-Reit appears to have treated AHBT more favourably (compared to PHCQ) by not imposing an obligation on AHBT to pay property tax, only to then claim the property tax from PHCQ instead.' The liquidators' acceptance of AH-Reit's property tax claim, without any scrutiny it would seem, was unsatisfactory, Justice Lim said. As a result, the High Court judge reduced AH-Reit's proof of debt by S$273,792 in property tax it was claiming for the period from October 2022 to June 2023. She also ruled that some of the items the Reit sought to claim under costs for replacement had insufficient evidence to prove that they were remedial works that fell within PHCQ's obligations under its lease. Nanthini Vijayakumar from TSMP Law was the lead counsel representing Allen Law, while Allen & Gledhill's Lee Bik Wei and her team acted on behalf of the liquidators. The case continues.
