Re Taisoo Suk (as foreign representative of Hanjin Shipping Co Ltd)
Jurisdiction | Singapore |
Judge | Aedit Abdullah JC |
Judgment Date | 14 September 2016 |
Neutral Citation | [2016] SGHC 195 |
Published date | 17 September 2016 |
Date | 14 September 2016 |
Year | 2016 |
Hearing Date | 09 September 2016 |
Subject Matter | Insolvency Law,Whether Singapore court should recognise Korean rehabilitation proceedings and grant restraint and stay orders in assistance of those proceedings,Recognition of foreign insolvency proceedings,Cross-border insolvency |
Plaintiff Counsel | Sim Chong, Yap Hao Jin and Tee Li Min Joan (Sim Chong LLC) |
Court | High Court (Singapore) |
Citation | [2016] SGHC 195 |
Docket Number | Originating Summons No 914 of 2016 |
On Friday 9 September 2016, an urgent
For the avoidance of doubt it is hereby declared that nothing in these Rules shall be deemed to limit or affect the inherent powers of the Court to make any order as may be necessary to prevent injustice or to prevent an abuse of the process of the Court.
On the direction of the Court and in fulfilment of his duties, Counsel for the Applicant informed various interested parties of the hearing which took place in the afternoon of 9 September 2016. Those present at the hearing were Counsel for the plaintiffs in a prior arrest of a vessel of the Hanjin fleet, the
After considering the submissions of Counsel for Hanjin, as well as the facts and circumstances, I granted the orders sought. These brief grounds of my decision are issued for the assistance of interested parties ahead of the
Hanjin is the largest container-shipping firm in Korea and the ninth largest in the world. The financial woes faced by the company have been covered extensively by the press to date. These difficulties have reportedly led to disruptions in the transport of goods throughout the Asia-Pacific. To find its way out of its present troubles, on 31 August 2016, Hanjin filed an application for rehabilitation proceedings to the Korean Bankruptcy Court under the Korean Debtor Rehabilitation and Bankruptcy Act. On the same day, the Korean Bankruptcy Court granted provisional orders to preserve Hanjin’s assets. This was subsequently followed by an order granted on 1 September 2016 by the Seoul Central District Court commencing the rehabilitation procedure for Hanjin (“the Commencement Order”). Hanjin’s President and Chief Executive Officer, Mr Taisoo Suk, was appointed custodian of the company, and he is the foreign representative and applicant in the present matter.
In his affidavit filed in support of the application, Korean attorney Lee Wan Shik likened the Korean rehabilitation regime to Chapter 11 proceedings under the United States’ Bankruptcy Code. The Korean rehabilitation process would apparently involve various phases, leading to the presentation of a rehabilitation plan to interested parties (including creditors) by 25 November 2016. Thereafter, the interested parties would meet to review the plan and a vote would be taken. If, by the requisite majority, the interested parties approve of the plan, the plan would then be submitted for review by the Korean Court. The process was estimated to take a couple of months, and that was why in the present application the Applicant sought the restraint and stay until 25 January 2017.
Since the Commencement Order was obtained, Hanjin made applications similar to the present in the United Kingdom, the United States, and in Japan. At the time of the hearing before me, the United Kingdom courts had granted the relief sought, while the US courts had made an interim provisional order. The proceedings in Japan were pending.
The Applicant’s CaseThe Applicant pointed to a number of measures taken by Hanjin following the granting of the Commencement Order. Hanjin had already engaged PwC Korea to be its insolvency consultants, to assist in the preparation of the plan for rehabilitation. Further, Hanjin was preparing to send a written notice to notify all of its creditors, including those outside Korea, of the rehabilitation proceedings in Korea; the notice to be sent to Singapore creditors would be in English. The rehabilitation plan was to be circulated to all creditors once ready. In his affidavit, the Applicant assured that creditors, including those from Singapore, would have the opportunity to review and vote on the rehabilitation plan. In the interim, the Applicant had applied for restraint and stay orders in various jurisdictions apart from Singapore, to allow Hanjin’s assets to be marshalled and its rehabilitation to be coordinated. Hanjin aimed to continue its business and to earn revenue in the meantime.
In urging this Court to allow his application, the Applicant argued that the application made before this Court was an essential part of the series of applications that Hanjin had made across the word to prevent piecemeal and haphazard resolution of the company’s difficulties. Any such disparate treatment would imperil Hanjin’s rehabilitation. The Applicant asserted that unless this Court grants the current application, it was highly likely that there would be a disorderly scramble amongst Hanjin’s creditors to act quickly to seize and/or exercise their lien on vessels and containers which constituted Hanjin’s principal business assets. In fact, such actions had already taken place in various ports of the world. In Singapore,
The Applicant further emphasised that given the global nature of Hanjin’s business, the company’s difficulties would cause severe disruptions to global trade, the global market, and the global supply chain logistics. The knock-on effects of Hanjin’s insolvency and liquidation were also stressed. The Applicant pointed to the possible impact on the company’s employees, creditors and customers. It was highlighted that containers on board some of Hanjin’s vessels might actually belong to other carriers which were partners of Hanjin in a shipping alliance. With disruptions in the operation of Hanjin’s vessels, customers might also be left with their goods immobilised far from their destination. Furthermore, Hanjin and its subsidiaries in Singapore employed some 112 employees here, and these employees would likely lose their jobs if Hanjin was unable to carry out its rehabilitation.
Time and space was therefore needed for Hanjin to coordinate its rehabilitation plans, for the best interests of all stakeholders. It was emphasised that the Korean rehabilitation proceedings were fair and equitable. In his affidavit, the Applicant stated that Hanjin intended to treat all creditors in the same class equally, regardless of nationality, and that international creditors (including Singapore creditors) would be allowed to participate in the Korean rehabilitation proceedings.
In persuading this Court that it has inherent powers, as set out in O 92 r 4, to grant the application, the Applicant first highlighted Hanjin’s substantial connections to Singapore. Hanjin had two subsidiaries in Singapore – Hanjin Shipping (Singapore) Pte Ltd was incorporated in Singapore since 23 years ago in 1993, while Hanjin Overseas Tanker Pte Ltd was incorporated in Singapore in 2007. The two subsidiaries had significant trade volume in Singapore. Both Hanjin and its two subsidiaries also had assets here. The Applicant then referred to a number of foreign decisions to support his case. Reference was made to the observations of the US Court of Appeals’ decision in
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