Key Points 

As we previously reported, the amendments made to the Singapore Companies Act (Companies Act) are part of Singapore’s efforts to become a hub for the restructuring of troubled companies in Asia.

Background

Pars Ram Brother (Singapore Company) obtained trade financing facilities from various banks, and pledged the goods financed by each bank under a pledge arrangement as security.

The Singapore Company entered into voluntary liquidation. The liquidator discovered that the Singapore Company had mixed the goods making it impossible to identify which goods were financed by which bank.

Issue

In the first judgment under Singapore’s new ‘super priority’ DIP financing regime, the Singapore High Court declined to grant priority status to funds to be advanced to the Attilan Group.

The Singapore regime is the first to import US Chapter 11-style DIP priority funding mechanisms into a jurisdiction with primarily English-law based corporate law and insolvency regimes.

The judgment discusses how Singapore provisions align with established principles under US Bankruptcy Code provisions and case law.

The new laws have made Singapore more attractive 

The maritime and offshore (M&O) sector has endured almost a decade of distress since the global financial crisis. Overzealous ordering of newbuild vessels during the boom years, made available by cheap credit and the lure of increasing global demand, has left many sectors of the maritime industry oversaturated.

On 8 November 2017, the High Court released its decision in Re Attilan Group Ltd [2017] SGHC 283 (the "Attilan" case). The decision is interesting as it marks the first time the High Court had the opportunity to hear arguments on section 211E of the Companies Act (the "Act") on super priority for rescue financing.

In its recent decision in Pars Ram Brothers (Pte) Ltd (in creditors’ voluntary liquidation) v Australian & New Zealand Banking Group Ltd and others [2017] SGHC 38, the Singapore High Court held that the security interests of lenders survived the commingling of assets, and that the assets should be divided among the secured lenders in proportion to their respective contributions.

Facts

After months of public consultations and revision, the Singapore parliament passed the Companies (Amendment) Bill (the "Bill") on 10 March 2017 amending the Singapore Companies Act (the "Companies Act"). The Bill contains, among others, significant and novel changes to Singapore's insolvency laws. This is no doubt a giant step towards positioning Singapore as Asia Pacific's Debt Restructuring Hub with cross-border restructuring capabilities.

Introduction - The Bill

On March 10, 2017, Singapore's Parliament approved the Companies (Amendment) Bill 2017 ("Act") to enhance the country's corporate debt restructuring framework. The Act was assented to by President Tony Tan Keng Yam on March 29, 2017, and became effective after it was published in the Singapore Government Gazette on March 30, 2017.

Introduction