Re Rams Challenge Shipping Pte Ltd and other matters [2022] SGHC 220

These brief remarks are issued to assist lawyers and insolvency practitioners with respect to the determination of an entity’s centre of main interests (“COMI”), and the scope of the recognition of foreign proceedings and court orders.

The claimant, Hajime Shinji, is the trustee of the 19 companies in the present applications: Rams Challenge Shipping Pte Ltd; Rams Shipholding Pte Ltd; United Woodchip Carrier Pte Ltd; Ocean Woodchip Carrier Pte Ltd; Sagittarius (PCTC) Pte Ltd; Ocean Promise Pte Ltd; Ocean Sentosa (PCTC) Pte Ltd; United (Semi-Open) Pte Ltd; Ocean (Semi-Open) Pte Ltd; HK Challenger Pte Ltd; United Ocean (Hull No. S-1527) Pte Ltd; Globalbulk Partner Pte Ltd; Ocean Eternity Pte Ltd; Global Peace Shipping Pte Ltd; United Fortune Carrier Pte Ltd; United Ocean (Hull No. SC-195) Pte Ltd; Oshima Island (Hull No. S-10687) Pte Ltd; Santosh Woodchip Carrier Pte Ltd; and Ocean Harmony Pte Ltd. Collectively, they are referred to as the “Companies”.

The Companies are part of a ship-owning and management group known as the United Ocean Group (“Group”). Each of the 19 companies was incorporated in Singapore as a single purpose vehicle to own a vessel as part of the Group’s business. The Group is, in turn, managed by, among other entities, the Rams Corporation Kabushikai Kaisha (“Rams Corporation”), a company incorporated in Japan. The Rams Corporation was in charge of all negotiations with Nippon Yusen Kabushiki Kaisha and its affiliates (“NYK Group”) for the chartering of the Group’s vessels. The Companies were then used to charter their vessels to the NYK Group. Because of the function of the Companies, they did not have any employees. All negotiations and operations of the vessels were dealt with by other entities.

Due to a failure of the Group to repay sums demanded by creditors sometime in October 2015, an application was made by the creditors to the Japanese Courts to place the Group, including the Companies, into corporate reorganisation ("Japanese Proceedings"). This was done to facilitate an orderly administration and discontinuance of the business, and a sale of assets for redistribution. Pursuant to the reorganisation plans, the vessels owned by the Companies have been sold to satisfy claims against them.

In connection to the reorganisation of the Group, various orders were made by the Japanese Courts (“the Orders”). The Orders may be broadly organized into six categories: (a) orders placing the Companies into reorganisation proceedings and appointing the applicant as the trustee for the Companies (“Commencement Orders”); (b) orders extending the deadline for the applicant, the Companies and their creditor to submit reorganisation plans (“Reorganisation Orders”); (c) orders confirming the reorganisation plans proposed by the applicant for the Companies; (d) orders amending the Commencement Orders; (e) orders amending the Reorganisation Orders; and (f) orders pertaining to the assessment of the claims raised by two creditors, Mr Chia Hong Kwa and Mr Ajit Sahoo (“Two Creditors”), against the Companies.

In the present application, the applicant sought recognition, not just of the Japanese Proceedings as foreign main proceedings pursuant to Art 2(f) read with Art 17(2)(a) of the Third Schedule of the Insolvency Restructuring and Dissolution Act 2018 (the “Model Law”), but also of the Orders under Art 21(1)(g) of the Model Law.

The Japanese Proceedings were determined to be the foreign main proceedings under Art 17 of the Model Law. The requirements for recognition of the Japanese Proceedings under Art 17(1) of the Model Law were met. The COMI of the Companies was found to be in Japan, despite the Companies having been incorporated in Singapore. These Companies were all one-ship companies, with no employees, which were essentially run from Japan. The only commercial activity of the Companies consisted of charterparties negotiated and concluded on their behalf by the Rams Corporation with the same counterparty, namely the NYK Group, a major Japanese shipping company. Given the absence of links to Singapore, and the commercial activity of the Companies all occurring in Japan, the presumption in favour of Singapore as the Companies’ COMI under Art 16(3) of the Model Law was readily displaced.

The other primary question was the scope of the recognition to be granted. As was outlined in Re Tantleff, Alan [2022] SGHC 147, recognition under the Model Law goes beyond recognition of the Japanese Proceedings and may extend to the recognition of the Japanese Orders.

The Japanese Proceedings would appear to be similar to judicial management under s 91 of the Insolvency Restructuring and Dissolution Act 2018 (“IRDA”), with a court appointed officer taking charge of the companies, acting under a broad mandate given by the court. It differs from the debtor-in-possession regime in the form of Chapter 11, and our moratoria regime under s 64 of the IRDA. There was no reason to differentiate recognition of the Japanese Orders simply because it was of a different nature than that in Re Tantleff (which concerned recognition of a Chapter 11 plan of liquidation in the United States).

As was outlined in Re Tantleff at [81], there may be some outer boundaries, beyond which recognition may not be accorded. The precise limits would remain to be examined in subsequent cases. What is important to my mind is that a foreign order does not operate substantially outside what might properly be regarded as the proper purview of an insolvency or restructuring effort, though the modalities and detailed scope may differ from jurisdiction to jurisdiction. A strict analogy or parallel with Singapore insolvency or restructuring regimes is not necessary. I suspect most insolvency or restructuring orders the world over will be readily accommodated, though there may be outliers. Public policy considerations also may come into play. Otherwise, in most instances, the main consideration is the opportunity for local creditors to participate or be heard in the process: Re Tantleff at [78]; In re CGG SA 579 BR 716 (Bankr SDNY, 2017) at 720. Here, sufficient assurance was given of that: the claims of the Two Creditors were represented by counsel and participated fully in the Japanese Proceedings.

In addition, I specified as usual that any expatriation of funds would require leave of court, though if there is no objection or complication, it may be that this request can be dealt with asynchronously.