High-profile businesswoman Jannie Chan, whose bankruptcy was set aside last December, has won reinstatement as director of the family holding company she ran with her former husband.
The High Court ruled that she was automatically reinstated as a permanent governing director of TYC Investment after her bankruptcy was set aside.
The case dealt for the first time here with what happens when the court sets aside an order to bankrupt a company director on appeal and its effect on his directorship.
Judicial Commissioner Audrey Lim said the various authorities show the effect is in general the same as when a bankruptcy is annulled, which means "the bankruptcy is treated as not having occurred".
"The fact that the bankruptcy order has been set aside on appeal should have the effect of restoring Jannie Chan to her original position as though no bankruptcy order has ever been made against her," she explained in judgment grounds issued on Tuesday.
Ms Chan, 72, together with then husband Henry Tay, had incorporated TYC as a family holding company in 1979 with each holding a founder share of 44 per cent and 46 per cent of voting rights in TYC respectively. Their three children share the remaining 10 per cent voting rights in varying amounts.
The judge noted that TYC was set up to hold shares in The Hour Glass and other "not insubstantial" family assets for themselves and their children's benefit.
The couple, who co-founded luxury watch retailer The Hour Glass, had ended their 41-year marriage in 2010. After the divorce, there was an agreement in May 2012 which provided that neither would sign a cheque on TYC's bank accounts unless the other party has signed an approving voucher.
Ms Chan's bankruptcy order was set aside last December, some three months after she was made bankrupt by a bank.
TYC, represented by lawyer Chu Hua Yi, argued there was no provision for her to be reinstated and sought the court's sanction that remaining director Henry Tay be allowed to name a replacement based on the articles regulating the company. Together with Mr Tay, represented by Senior Counsel Chelva Retnam Rajah and lawyer Megan Chia, they submitted that the order setting aside her bankruptcy did not have "the effect of retrospectively annihilating Jannie Chan's bankruptcy for the purpose of rendering the vacation of her office as director void".
Ms Chan, defended by lawyer Bachoo Mohan Singh, counter-claimed that she remained a permanent governing director of TYC.
Mr Chu said if the relevant article is interpreted in such a way that the setting aside of the bankruptcy order results in automatic reinstatement of a company director, "all companies would be held hostage to such a construction".
TYC suggested her reinstatement meant that every company whose director is adjudged a bankrupt runs the risk that the director's office may be restored (however long it takes), even though the constitution of the board or the company's business may have undergone radical changes.
Judicial Commissioner Lim made clear "each case turns on its facts". She noted that there was no evidence that TYC had undergone any "radical changes" since Ms Chan's bankruptcy and the order to set it aside.
She added that TYC is not a public company which has to take into account shareholders and investors' interests but a private family holding company for a small group.
The judge ruled Ms Chan was automatically reinstated as governing director of TYC and stressed that had her bankruptcy not been set aside, her office of director would have remained vacated.