Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Swiber - What next?

Swiber - What next?
The twists and turns of the Swiber Holdings saga has resulted in an initial winding up application for Swiber and its major subsidiary, Swiber Offshore Construction Pte Ltd (SOC) turning into an application for judicial management (JM) instead.

The applications, to be placed under JM along with an interim JM order to be made, and for the discharge of the provisional liquidators and withdrawal of Swiber's earlier winding up application, are pending before the High Court.

The interim applications were due to be heard on 2 August and a pre-trial conference for the main JM applications has been fixed for Friday (5 August). According to a Clyde & Co brief, the Singapore High Court's hearing list shows that the applications to withdraw the winding up application and to discharge the Provisional Liquidators will also be heard on Friday.

While this offers some prospect of a better outcome for some, Clyde & Co partner Prakash Pillai and associate director Koh Junxiang warned that there are still some provisos to look out for.

"... it would not be wrong to assume that all things being equal, a JM of Swiber and SOC should give the creditors a better recovery than a straightforward liquidation," they said.

"However, this is by no means guaranteed. Even if the statement of proposals is approved by the creditors, the implementation of those proposals remains fraught with uncertainty," they warned.

"Swiber's ability to continue trading and repay its creditors depends in part on factors outside the judicial manager's control eg the health of the particular industry sector or the economy at large," Pillai and Koh noted.

While they qualified that "at this stage, it is not clear how (or if) a JM will prove to be more advantageous to the creditors of Swiber and SOC, as compared to a straightforward liquidation scenario," the maritime law specialists gave a summary of what a typical unsecured creditor can expect to happen in this case.

Firstly, it should be noted that unlike liquidation, JM is generally viewed as a rehabilitative process. "Essentially, it is a temporary, court-supervised rescue plan aimed at giving a financially troubled company time and space to rehabilitate itself and continue operating," Pillai and Koh explained.

Further, from the time the JM orders are made, the judicial manager has 60 days to issue a statement of proposals and this 60-day period can be extended by the court.

The statement of proposals, once issued, must be placed before the creditors at a general meeting of the creditors. A creditor must first lodge a proof of debt to be able to vote at the meeting.

At the creditors' meeting, a majority in number and value of the creditors, present and voting, may approve the statement of proposals, with or without modifications. The judicial manager will then report the results of the meeting to the Court, which has the power to discharge the JM order if the statement of proposals was not duly approved.

The JM applications for Swiber and SOC are, at the moment, pending before the High Court, and much will depend on whether these are granted, the Clyde & Co lawyers noted.

If they are granted, it would mean that the High Court had found that there was a real prospect that one or more of the statutory objectives for putting a company under JM, ie the survival of the company (or any part of its undertaking) as a going concern, the approval of a Scheme of Arrangement, a more advantageous realisation of the company’s assets than in a winding up, would be met, they concluded. This would then put creditors on the long path towards helping the company towards recovery and possibly getting full payment.