The Re Tea Corporation Principle and Junior Creditors' Rights to Participate in a Scheme of Arrangement: A View from Singapore

• Main Author: SEAH, Chi-Ling
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2011
• Subjects: Insolvency; Schemes of Arrangement; Bankruptcy Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/990; http://dx.doi.org/10.1002/iir.194
• Institution: Singapore Management University

This paper examines the application of the principle derived from the Re Tea Corporation’s case in recent schemes of arrangement to break negotiation deadlocks between senior and junior creditors of a financially distressed company. This paper argues against an overly technical application of the principle in the Re Tea Corporation’s case which might work injustice against junior creditors by effectively shutting them out of a restructuring. This paper further explores how the holdout problem, which led to the formulation of the Re Tea Corporation principle in the first place, could be addressed while balancing the competing interests of junior claimants in a scheme of arrangement.