Golf: High Court grants member’s bid to wind up Laguna National Golf and Country Club Ltd

SINGAPORE – The Laguna National Golf and Country Club Ltd will be wound up after the High Court on Monday granted the application by the club’s pioneer member Lim How Teck to do so.

Mr Lim had filed a petition on April 4, 2022, to wind up the company after it failed to pay back millions of dollars owed to a group of noteholders.

The firm previously owned the Laguna National Golf and Country Club, which is now known as the Laguna National Golf Resort Club.

In the judgment issued on Monday, High Court judge Chua Lee Ming ordered for the company to be wound up as “there is no dispute that the company is unable to pay its debts”. The Court said that the club’s trustee, British and Malayan Trustees, would be in a position of conflict of interest once the winding-up starts. It also appointed Cameron Lindsay Duncan and David Dong-Won Kim of KordaMentha Restructuring as liquidators.

In the light of the developments, the club assured members on Monday that it would be business as usual. It is located a 10-minute drive from Changi Airport and houses a 36-hole golf venue – which recently hosted the DP World Tour’s Singapore Classic – and the Dusit Thai Laguna Singapore hotel.

In a note to members, the club said: “Our new company Laguna National Golf Resort Club will not be affected. This is for your information and please be assured that there is no cause for concern.”

When contacted, club owner and motoring tycoon Peter Kwee, 74, clarified that the company being wound up is the one that used to own the club.

In 2001, Laguna Golf Resort Holding Pte Ltd (LGRH) acquired the club. LGRH is owned by Mr Kwee’s Group Exklusiv. The lease for the land on which the golf club operates was originally due to expire in 2021. In 2012, the lease was extended to 2040 and was in 2016 sold to Laguna Hotel Holdings Pte Ltd, which is owned by LGRH.

Mr Kwee said that he had moved its core business assets to Laguna Hotel Holdings and set up a new company to get financing from banks to build the hotel and revamp the golf course when he took over.

He added: “We have to respect the decision of the court. Our books are transparent and the liquidators will now take over. We are running the club under our current company as usual and members have been informed that there is nothing to be concerned about.”

The 36-hole golf venue was incorporated in 1991 and its pioneer batch of 971 members took up a $120,000 unsecured note on top of paying membership fees, which ranged from $40,000 (restricted individual) to $180,000 (open corporate).

Debentures are debt financial instruments used to raise money in return for payouts. In the club’s prospectus, members were told by the then owners – a consortium including Natsteel and DBS Land subsidiary Resorts International – that the note would be redeemed in full in 30 years’ time, on June 11, 2021.

Mr Kwee had written to the trustee the day before the redemption date, saying the club was unable to fulfil the redemption due to its “current financial position”. The notes amounted to $70.6 million in value, the club’s 2020 financial statements indicated.

Through the years, there have been various other offers from Laguna to exchange these unsecured notes for new memberships, and the group of nearly 1,000 original note holders has decreased steadily.

Mr Mark Teng, executive director at legal firm That.Legal clarified that companies, regardless of the similarity in their names, are separate legal entities.

He said: “The debts of one company would not usually affect the liabilities of another.... A liquidator will typically act for the creditors and may seek to recover assets of a company (in liquidation) that may have been unfairly dissipated. For example, a liquidator can seek to reverse undervalued tractions or a related party transaction.”

Mr Kyle Gabriel Peters and Mr Gerard Quek of law firm PDLegal said in a joint-reply: “If the liquidators find that a new company was unjustly enriched at the expense of Laguna National Golf and Country Club Ltd, it could be possible for the liquidators to trace and identify assets which have a nexus to any wrongdoings caused to Laguna National Golf and Country Club Ltd, and seek recovery.”

On whether the new entity will be unaffected, they added that it was “too early to say” as the liquidators will take control of the company, “conduct an investigation into the affairs, and seek recovery where appropriate against the relevant parties”.