Re Sapura 1200 Ltd [2024] SGHC 242

These brief grounds are issued to capture the use of the Protocol on Court-to-Court Communication and Cooperation between Malaysia and Singapore in Cross-Border Corporate Insolvency Matters (the “Protocol”) and the application of the draft Judicial Insolvency Network guidelines on the Management of Applications for the Arrest of Vessels where the Vessel Owner or Bareboat Charterer is the Subject of Cross-Border Insolvency Proceedings (the “Draft JIN Admiralty Guidelines”). It is hoped that this will guide practitioners in the field.

Background

The first applicant, Sapura 1200 Ltd (the “Company”) is a direct subsidiary of Sapura Offshore Sdn Bhd, which is in turn a subsidiary of Sapura Energy Berhad. Sapura Energy Berhad and its direct and indirect subsidiaries form the Sapura group of companies (the “Sapura Group”).

On 20 February 2024, the Sapura Group applied to the Malaysia Court for an order to (a) convene meetings of its creditors; and (b) restrain all proceedings against the Sapura Group and/or its assets for three months from 11 March 2024 (the “Malaysian Reorganisation Proceeding”). An order in terms of the orders sought was granted on 7 March 2024. The restraining order was further extended until 11 March 2025.

The Company applied for the Malaysian Reorganisation Proceeding to be recognised as a foreign main proceeding in Singapore, in accordance with Art 2(f) of the UNCITRAL Model Law on Cross-Border Insolvency (30 May 1997) (the “Model Law”), which is implemented by way of the Third Schedule and s 252 of the Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed) (the “IRDA”) (the “Recognition Application”). The Company also sought corresponding orders for, amongst other things, a recognition of the second to fourth applicants being recognised as foreign representatives within the meaning of Art 2(i) of the Model Law, and a stay against: (a) the commencement or continuation of any actions or proceedings against the Company, including any arrest of the “Sapura 1200” vessel; (b) an execution against the Company’s property; and (c) the right to transfer, encumber or otherwise dispose of any of the Company’s property.

The Company also sought an interim order, pursuant to Art 19(1) of the Model Law, for a stay of any proceedings, execution or other legal process being commenced or continued against the Company or its property and any enforcement of security over the Company’s property, pending the hearing and determination of the Recognition Application.

The decision on the Recognition Application

I granted the interim relief sought. The requirements in Art 19(1) of the Model Law were satisfied. The Company had filed an application for recognition. The application for interim relief was brought at the request of the second to fourth applicants who were validly appointed and constituted “foreign representatives” under Art 2(i) of the Model Law. There was an urgent need for the protection of the Company’s property and, specifically, the “Sapura 1200” vessel. The vessel was scheduled to arrive in Singapore on 7 July 2024 and undergo dry docking in Singapore until 15 or 16 August 2024. I accepted that the vessel was a key asset of the Company – it was employed in various projects, and its arrest would cause the Company to be in breach of the relevant project’s contracts and deprived of income therefrom. There was a real risk that the Company’s creditors would attempt an arrest of the vessel as the creditors had issued several letters of demand.

The Recognition Application, and the consequent orders prayed for, were also granted. The requirements stipulated within Art 17 of the Model Law for the recognition of a foreign main proceeding were satisfied. The Malaysian Reorganisation Proceeding was a “foreign proceeding” in accordance with Art 2(h) of the Model Law: see Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte Ltd [2023] 2 SLR 421 at [29]. The other requirements under Art 17 – for the application to be brought by “foreign representatives”, in accordance with Arts 15(2) and 15(3), and submitted to a competent court under Art 4 – were also met. I made a further order for the applicants to write in to court with the details of any vessels owned by the Company which may be entering Singapore, at least 24 hours before such entry and an advertisement to be made indicating the protection against the arrest of the named vessel.

Court-to-court communications and the Draft JIN Admiralty Guidelines

The Draft JIN Admiralty Guidelines have a similar objective of enhancing the coordination and cooperation of the courts in managing applications for the arrest of vessels, where an entity concerned is undergoing cross-border insolvency or restructuring proceedings. The guidelines are still in draft form, ie, they have not been formally adopted by the Judicial Insolvency Network, but even the current draft provides useful guidance for the better management of these cases. Measures under the Draft JIN Admiralty Guidelines are aimed at ensuring that there is proper consideration of the impact of arrest on restructuring proceedings, and conversely, the impact of restructuring on recovery on arrest. These include having the applicant for recognition informing the court in the arresting jurisdiction of vessels that may be subject to arrest, the existence of orders affecting the situation, and the advertisement of any orders and decisions made. In the present case, advertising and notification orders were made at both the interim and final applications.

Court-to-court communications were held with the Malaysian court to apprise the Malaysian court of the steps taken in Singapore, and the application of the Draft JIN Admiralty Guidelines. Such communication also enabled the efficient management of potential further applications by other entities of the Sapura Group for recognition of the Malaysian Reorganisation Proceedings in Singapore to restrain the arrest of any vessel owned or bareboat chartered by the Sapura Group.

Conclusion

It is hoped that the publication of this decision will bring greater awareness of the availability of the Protocol as well as the work being done on the Draft JIN Admiralty Guidelines.