IM Skaugen SE v MAN Energy: Moratorium under s 211B Companies Act & Schemes of Arrangement
The High Court of Singapore heard Originating Summonses No 673, 674 and 675 of 2018 filed by IM Skaugen SE, SMIPL Pte Ltd, and IMSPL Pte Ltd, respectively, for moratorium relief under s 211B(1) of the Companies Act. MAN Energy Solutions SE opposed OS 673 and 675. The court granted the applicants moratorium relief to allow them to propose a compromise or arrangement to their creditors as part of a group restructuring plan. The court addressed the interpretation of ss 211B(4)(a) and 211B(4)(b) of the Act and the weighing of creditor support and resistance.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Moratorium relief granted to the applicants.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court addresses moratorium relief under s 211B of the Companies Act for group restructuring, focusing on creditor support.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| IM Skaugen SE | Applicant | Corporation | Moratorium Relief Granted | Won | |
| SMIPL Pte Ltd | Applicant | Corporation | Moratorium Relief Granted | Won | |
| IMSPL Pte Ltd | Applicant | Corporation | Moratorium Relief Granted | Won | |
| MAN Energy Solutions SE | Respondent | Corporation | Application Unsuccessful | Lost | |
| Zhonghua Hull No 451 LLC | Other | Corporation | Neutral | Neutral | |
| DHJS Hull 2007-001 LLC | Other | Corporation | Neutral | Neutral | |
| DHJS Hull 2007-002 LLC | Other | Corporation | Neutral | Neutral | |
| Taizhou Hull No WZL 0501 LLC | Other | Corporation | Neutral | Neutral | |
| Taizhou Hull No WZL 0502 LLC | Other | Corporation | Neutral | Neutral | |
| Taizhou Hull No WZL 0503 LLC | Other | Corporation | Neutral | Neutral | |
| Teekay Group | Other | Corporation | Neutral | Neutral | |
| Gasmar AS | Other | Corporation | Neutral | Neutral | |
| Nordea Bank Finland plc | Other | Corporation | Neutral | Neutral | |
| Alameda Shipping Company Pte Ltd | Other | Corporation | Neutral | Neutral | |
| Conception Shipping Company Pte Ltd | Other | Corporation | Neutral | Neutral | |
| Innovation Shipping Company Pte Ltd | Other | Corporation | Neutral | Neutral | |
| Orinda Shipping Company Pte Ltd | Other | Corporation | Neutral | Neutral | |
| Shasta Shipping Company Pte Ltd | Other | Corporation | Neutral | Neutral | |
| IM Skaugen Nordic Trustees Bondholders | Other | Trust | Neutral | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Kannan Ramesh | Judge | Yes |
4. Counsels
4. Facts
- IM Skaugen SE and its subsidiaries sought moratorium relief under s 211B(1) of the Companies Act.
- MAN Energy Solutions SE opposed the moratorium applications for IMSPL.
- The applicants sought the moratorium to propose a compromise or arrangement to their creditors as part of a group restructuring plan.
- The IMS Group faced financial difficulties and sought to restructure its business.
- Nordea Bank Finland plc was a major creditor of the IMS Group and did not object to the moratorium.
- MAN was a creditor of IMSPL by reason of an arbitration award.
- The applicants alleged that MAN manipulated test results in order to conceal the true fuel consumption of the engines.
5. Formal Citations
- Re IM Skaugen SE and other matters, Originating Summonses No 673–675 of 2018, [2018] SGHC 259
6. Timeline
| Date | Event |
|---|---|
| MAN commenced arbitration proceedings against IMSPL | |
| MAN obtained an arbitration award against IMSPL | |
| IMSPL commenced a second arbitration proceeding against MAN | |
| Provisional enforcement order made in OS 731 | |
| SUM 3315 dismissed by the High Court | |
| Applicants sought a six-month moratorium | |
| Hearing date | |
| Moratorium orders granted | |
| MAN filed an appeal against the order granting the moratorium in OS 675 | |
| Moratorium orders lapsed | |
| Winding-up applications against IMSPL and SMIPL granted | |
| Judgment Date |
7. Legal Issues
- Interpretation of Section 211B(4) of the Companies Act
- Outcome: The court held that the requirements in ss 211B(4)(a) and 211B(4)(b) should be read conjunctively in the Second Scenario and that only s 211B(4)(a) would apply to the First Scenario.
- Category: Statutory Interpretation
- Sub-Issues:
- Disjunctive vs. Conjunctive Requirements
- Creditor Support
- Bona Fides
- Creditor Support for Moratorium Relief
- Outcome: The court held that the appropriate test was whether, on a broad assessment, there was a reasonable prospect of the compromise or arrangement working and being acceptable to the general run of creditors.
- Category: Substantive
- Sub-Issues:
- Sufficiency of Creditor Support
- Weighting Creditor Opposition
- Group Restructuring Context
- Bona Fides of Moratorium Application
- Outcome: The court held that the application was brought bona fide.
- Category: Procedural
- Sub-Issues:
- Genuine Desire to Restructure
- Abuse of Process
- Shell Company
8. Remedies Sought
- Moratorium
- Restraining of Proceedings
9. Cause of Actions
- Application for Moratorium Relief
- Enforcement of Arbitration Award
10. Practice Areas
- Commercial Litigation
- Insolvency
- Restructuring
11. Industries
- Shipping
- Energy
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Tan Cheng Bock v Attorney-General | Court of Appeal | Yes | [2017] 2 SLR 850 | Singapore | Cited for the three-step approach to purposive interpretation. |
| Man Diesel Turbo SE v IM Skaugen Marine Services Pte Ltd | High Court | Yes | [2018] SGHC 132 | Singapore | Cited in relation to the dismissal of SUM 3315. |
| Re Ng Huat Foundations Pte Ltd | High Court | Yes | [2005] SGHC 112 | Singapore | Cited for the principle that the court must be satisfied that it would not be futile to call the scheme meeting. |
| The Royal Bank of Scotland NV and others v TT International Ltd and another appeal | Court of Appeal | Yes | [2012] 2 SLR 213 | Singapore | Cited for the principle that the court must be satisfied that it would not be futile to call the scheme meeting. |
| Re Conchubar Aromatics Ltd and other matters | High Court | Yes | [2015] SGHC 322 | Singapore | Cited for the principle that an application for moratorium relief under s 210(10) was not dependent on a prior application to convene a scheme meeting under s 210(1) having been made. |
| Pacific Andes Resources Development Ltd and other matters | High Court | Yes | [2016] SGHC 210 | Singapore | Cited for the principle that the proposed compromise or arrangement was not required, for the purpose of an application under s 210(10), to have the level of detail or maturity that would be necessary for the court to convene a scheme meeting under s 210(1). |
| Electro Magnetic (S) Ltd (under judicial management) v Development Bank of Singapore Ltd | Court of Appeal | Yes | [1994] 1 SLR(R) 574 | Singapore | Cited for the interpretation of the moratorium provision in s 227C(c) and s 227D(4)(c) in the context of companies under judicial management. |
| Bristol Airport Plc v Powdrill | Not Available | Yes | [1990] 2 All ER 493 | England and Wales | Cited for the definition of 'proceedings' as legal or quasi-legal proceedings such as arbitration. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) s 211B(1) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) s 211B(4) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) s 210(10) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) s 211C(1) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) s 227C | Singapore |
| Interpretation Act (Cap 1, 2002 Rev Ed) s 9A(1) | Singapore |
| Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) ss 18 | Singapore |
| Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) ss 18A | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Moratorium
- Scheme of Arrangement
- Group Restructuring
- Creditor Support
- Bona Fides
- Automatic Stay
- Compromise
- Arrangement
- Debtor-in-Possession
- NewCo
15.2 Keywords
- Moratorium
- Scheme of Arrangement
- Restructuring
- Insolvency
- Companies Act
- Creditor Support
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Restructuring and Dissolution | 90 |
| Moratorium | 85 |
| Insolvency Law | 80 |
| Schemes of Arrangement | 75 |
| Group Restructuring | 70 |
| Bankruptcy | 70 |
| Company Law | 60 |
| Injunctions | 50 |
| Contract Law | 30 |
16. Subjects
- Schemes of Arrangement
- Moratorium
- Insolvency
- Restructuring