Starboard: The spate of oil and gas insolvencies

Hot on the heels of a historic oil price collapse that sent shockwaves through global markets, the financial troubles of Singapore-based commodity traders Hin Leong Trading (Pte) Ltd (Hin Leong) and ZenRock Commodities Trading Pte Ltd (ZenRock) have dominated the headlines.

Hin Leong and its shipping arm Ocean Tankers (Pte) Ltd (Ocean Tankers) initially applied to the Singapore High Court for moratoriums to put forward restructuring proposals to its creditors. Hin Leong’s application was objected to by several bank lenders. This led to a withdrawal of the application for a moratorium and an application for the company to be placed under judicial management, which was granted on 27 April 2020. Ocean Tankers similarly withdrew its application for a moratorium and was also placed under judicial management on 12 May 2020.

On 8 May 2020, ZenRock was also placed under judicial management pursuant to an application by HSBC Holdings. According to news reports, HSBC Holdings has alleged that ZenRock engaged in a series of "highly dishonest transactions" that included using the same oil cargo to obtain loans from at least two different lenders.

The experience in Singapore has shown that so long as creditors all move in the same general direction, the judicial management corporate rescue mechanism has tended to give rise to better debt recovery for creditors when compared to liquidation. Readers who have queries on their legal options can get in touch with us for assistance.