Counterparties of Swiber Holdings Limited ("Swiber")
and its group companies would do well to keep a close tab on any
debts outstanding from the group.
Swiber, an SGX-listed company in the oil fields services sector,
issued an announcement in the early hours of Thursday 28 July 2016
stating that it filed an application in the Singapore High Court
for a voluntary winding up on Wednesday afternoon, together with an
application to place the company under provisional liquidation.
According to the same announcement, provisional liquidators
(Cameron Lindsay Duncan and Muk Siew Peng of KordaMentha Pte Ltd)
have been appointed by the court. Swiber also announced that three
of their directors have resigned from the board as of 28 July 2016.
The hearing of the winding up application will take place on 19
August 2016 in the High Court.
In these circumstances, any parties who have been or are
presently dealing with Swiber or any of its group companies should
note the following:
Moratorium on legal
proceedings. From the time that a winding up application
is made, pending proceedings against the company can be stayed upon
application by the company or the provisional liquidators. Once the
winding-up order is made, no action or proceeding shall be
proceeded with or commenced against the company except with the
have not yet applied to be placed into liquidation. At
this time, Swiber's subsidiaries e.g. Swiber Offshore
Construction Pte Ltd do not appear to have yet commenced
liquidation. Therefore, it is still open for creditors of
Swiber's subsidiaries to pursue their claims against these
subsidiaries. However, if the subsidiaries follow their parent into
liquidation proceedings, then any proceedings will be similarly
Know your right of
set-off. Singapore law allows for mutual debts i.e. debts
owed to and by an insolvent company, to be
automatically set off against each other on the commencement of
liquidation. This self-help remedy is particularly significant for
counterparties of Swiber's subsidiaries which have not yet
commenced liquidation. It is still possible for a company (A) to
assign a debt owed from a Swiber subsidiary to another
company (B) that has a debt owed to that subsidiary so as
to allow Company B to avail itself of insolvency set-off. Note that
any purported assignment after the commencement of
liquidation will be void.
Account for all
debts. Given the moratorium against legal proceedings, if
you are an unsecured creditor of Swiber, your likely recourse is to
file a Proof of Debt with the liquidators after a winding up order
is made. It is important to ensure that all outstanding amounts are
properly accounted for with supporting documentation to avoid the
risk of a Proof of Debt being rejected by the liquidators.
Beware of voidable
transactions. The liquidation process is aimed at
realising as much of the company's assets as possible and
distributing them in accordance with the priorities under the
Companies Act. A transaction which unfairly evades such priorities
may be voidable. For example, an unsecured creditor who obtained a
more favourable debt repayment arrangement within the last six
months, may risk being found to have received an unfair preference
which is voidable under the law, and may wish to seek legal advice
on the same.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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