Singapore High Court extends Hyflux debt moratorium to end of April 2019

HYFLUX has convinced a Singapore High Court to extend its debt moratorium by four-and-a-half months to April 30 next year, despite arguments from some bank creditors that the insolvent firm should be kept on a tighter leash.

Justice Aedit Abdullah granted Hyflux the extension after hearing lawyers for the firm and its unsecured working group (UWG) of financial creditors on Monday.

Tan Kok Quan Partnership lawyer Eddee Ng, on behalf of BNP Paribas, Mizuho Bank, KFW IPEX-Bank, Bangkok Bank and Standard Chartered Bank, had argued for the moratorium to be extended to Jan 16 only.

Under the restructuring timetable put forth by Hyflux, it should be clear by mid-January if Hyflux has been able to get all creditor groups on board or not, Mr Ng said.

"It shouldn't have to be the case that the UWG needs to come to the court to get the moratorium lifted (if) this entire restructuring process is a no-go. It's the company that should come to the court and the company should be kept on a very tight leash in so far as time is concerned."

The informal steering committee of Hyflux medium-term noteholders took the same position.

But WongPartnership lawyer Manoj Sandrasegara, who represents Hyflux, argued for more time: "I think it's quite hard for us to do negotiations with a gun to our heads, on the basis that you only have a month and a bit to get the deal done."

Mr Sandrasegara asked for court protection to be extended until April 30. That is the same long-stop date fixed by the Salim-Medco consortium, which has offered to come in as a strategic investor.

Justice Abdullah agreed. Hyflux's next case conference will be held in the week of Jan 21, 2019 at the latest. Creditors can raise any concerns they may have about the continuing operation of the debt moratorium at that time, he said.

In court on Monday, Justice Abdullah noted that many retail investors are closely following the Hyflux case.

One retail investor had written to him to voice concerns "about the situation and where things are going", including concerns about possible write-downs, the judge noted. He said: "I understand their concerns but I think my role, my function and powers under these applications isn't that wide.

"The court in its proceedings under the restructuring regime is (mainly) concerned about the propriety of the sanctioned schemes of arrangement, and the scope for the court to go into questions of substance of any kind isn't really that wide."

However, these retail investors' perspectives may be considered "to some extent" if negotiations reach the stage where a scheme application is submitted, or perhaps at the stage where any rescue financing is contemplated, Justice Abdullah said.

He also urged Hyflux to address retail investors' concerns during discussions and townhall meetings that are expected to be conducted as early as January next year.