27 September 2021
[Order] First recognition by the Singapore Court of Chinese Bankruptcy Proceedings as Foreign Main Proceedings
ABLI has been aware of the following order since last year. However, as we only have information from Chinese sources, we debated whether it would be a good idea to write about the order. After careful consideration and further research, we decided to publish information about this order in English.
Please read our disclaimer below.
Sainty Marine Corporation Limited (江苏舜天船舶发展有限公司), a well-known shipping company based in Nanjing, China ("Chinese Entity"), was ruled to enter into bankruptcy liquidation proceedings in China, and Chinese firm, JC Master Law Offices, has been appointed to act as its administrator.
Upon investigation, the administrator discovered that Sainty Marine (Singapore) Pte Ltd ("Singapore Entity") held 70% of the equity of the Chinese Entity. The administrator therefore sent written correspondences to the Singapore Entity to, among others, ask for financial materials, but to no avail.
To properly deal with the 70% equity and given the fact that the administrator needed to exercise certain rights on behalf of the Chinese Entity, the administrator applied to the Singapore High Court requesting the Court to recognize the Chinese bankruptcy liquidation proceedings and the capacity of the administrator to act on behalf of the Chinese Entity in Singapore.
On 10 June 2020, an order was issued by the Singapore High Court:
1. It is hereby recognized that the (2016) Su 01 Po No. 8 procedures filed against Sainty Marine Corporation Limited on 29 December 2016 before the Nanjing Intermediate People's Court of Jiangsu Province of the People's Republic China and the rulings made thereunder have the meaning of foreign main proceedings under and within the scope of section 17 of the tenth schedule of the Companies Act (Chapter 50, Revised Edition 2006) (read together with section 345B of the Companies Act); and
2. It is hereby confirmed that JC Master Law Offices is the company's administrator in the foreign main proceedings.
Disclaimer: The above is a translation of the Singapore High Court order as reported by the Nanjing Intermediate People's Court in Chinese. ABLI has not independently sighted the original order but has, upon research, become aware of the originating summons number. Those who wish to learn more about this order are advised to file a request for inspection under eLitigation. Such a request is subject to the payment of relevant fees and approval by the Registrar.
According to official Chinese media, this order represents the first time that a Singapore court has given such recognition in relation to Chinese bankruptcy proceedings. With this recognition, the administrator enjoys relevant rights under the then Companies Act and now the Insolvency, Restructuring and Dissolution Act. Such rights include, among others, requesting the court to stay the commencement or continuation of individual actions or individual proceedings concerning the debtor’s property, rights, obligations or liabilities, and requesting the court to stay execution against the debtor’s property.
On February 22, 2021, the Jiangsu High People's Court announced the selection of this case as among 14 "typical bankruptcy cases" of Jiangsu for the year 2020. The case has also been mentioned by the Nanjing Bankruptcy Court (which precisely speaking is a division within the Nanjing Intermediate People's Court) as a "template" for judicial cooperation in cross-border insolvency between the courts of China and Singapore. The Chinese company is headquartered in Nanjing, the capital of Jiangsu Province.
For more information on China's bankruptcy procedures, read our Corporate Restructuring and Insolvency in Asia. Our webinar on Playbook on China’s Corporate Restructuring Tools and Their Cross-border Implications is also open for registration, and will take place on October 21.