Going Concerns- February 2026
As we step into 2026, Singapore’s restructuring and insolvency landscape continues to evolve, shaped by cross-border developments, judicial guidance, and the practical realities faced by practitioners. In this edition of Going Concerns, we examine recent decisions on scheme moratoriums, explore the Singapore Court’s approach to recognising Chinese reorganisation proceedings, and consider how the Singapore Court navigates the clashes between insolvency and admiralty law.
These articles highlight the dynamic and complex environment in which we operate, and underscore the importance of staying abreast of the latest legal trends and strategies.
We hope you enjoy this edition of the Going Concerns and we look forward to your continued support in the coming editions of the same. As usual, please feel free to contact us should you like to learn more on any topic.
TOPICS
- Same remedy but different outcomes – scheme moratorium under Section 64 of the IRDA
- Bridging Borders: Singapore’s embrace of PRC reorganisation proceedings
- Navigating troubled waters – Intersection between the laws of insolvency and admiralty
SAME REMEDY BUT DIFFERENT OUTCOMES – SCHEME MORATORIUM UNDER SECTION 64 OF THE IRDA
In December 2025, the Singapore court heard applications by mm2 Asia Ltd (“mm2 Asia”) (Re MM2 Asia Ltd (Linkwasha Holdings Pte Ltd, non-party) [2025] SGHC 251) (represented by Virtus Law LLP) and Energe Asia Pte Ltd (“Energe”) (Re Energe Asia Pte Ltd (PETCO Trading Labuan Co Ltd and others, non-parties [2025] SGHC 259) both for scheme moratorium protection under Section 64 of the IRDA. While the application by Energe was dismissed, mm2 Asia successfully obtained the necessary breathing room to pursue its rescue plan, demonstrating that the Court does not simply rubber-stamp moratorium applications and the right approach can mean the difference between a lifeline and liquidation. This article discusses why the Singapore court rewarded mm2 Asia’s bid for protection but slammed the brakes on Energe.
APPLICABLE LEGAL PRINCIPLES
The applicable legal principles to obtain a Section 64 IRDA moratorium are well established. In considering whether the extraordinary form of moratorium relief is warranted, the Court must ultimately balance two countervailing considerations: the need to allow sufficient breathing space for an applicant to attempt restructuring and the need to ensure that the interests of creditors are adequately safeguarded. The overall test is whether, on a broad assessment, there is a reasonable prospect of the proposed or intended compromise or arrangement working and being acceptable to the general run of creditors. The two key factors are:
- Whether the moratorium application is made good faith; and
- Whether there is sufficient evidence of creditor support for the compromise or arrangement (where one is proposed) or for the moratorium (where a compromise or arrangement is intended to be proposed).
We examine the cases brought forth by mm2 Asia and Energe below.
MM2 ASIA: FULL DISCLOSURE AND CREDITOR SUPPORT
mm2 Asia is a Singapore incorporated entertainment company and listed on the Singapore Stock Exchange Main Board. Mm2 Asia faced financial difficulties due to, among others, the collapse of its cinema operations which failed to recover post COVID-19 pandemic. The catalyst for the moratorium application was a series of creditor demands and legal actions, with Linkwasha Holdings Pte Ltd (“LW”), a creditor of mm2 Asia, opposing the application.
Mm2 Asia sought breathing space through the moratorium so that it could engage potential investors to bring into fruition a potential scheme of arrangement (concurrent with another mm2 entity) where mm2 Asia would distribute S$12 million among creditors, which would result in unsecured creditors receiving approximately 28 cents on the dollar of their outstanding debt, in contrast to the liquidation scenario where unsecured creditors would receive between nil and S$0.0255 on the dollar.
LW contended that mm2 Asia did not bring the moratorium application in good faith. The principal contentions raised in this regard were that mm2 Asia did not provide particulars on the computation of the claim that unsecured creditors would be repaid 28% of the debt owed to them, on the specifics involving the proposed investment by the white knight investor, and on the forecasted equity value that was being used as a model for computation of how much debt would end up being repaid.
The Singapore Court found that the lack of specifics at this stage was entirely understandable. In particular, the white knight was in the process of undertaking due diligence and it was unsurprising that some of the specifics had yet to be confirmed or may change in time as the discussions developed. Crucially, and in contrast with the below case of Energe, there was no reason for the Court to take an especially wary view of the lack of particulars at this stage or to conclude that the lack of specifics in the proposal should sound the death knell at such an early stage of the proceedings. To insist at a preliminary stage on full particulars of a scheme can be essentially to demand the impossible.
As regards creditor support, over half of the unsecured creditors explicitly supported the request for a moratorium and significantly, a fair number of these creditors provided support very recently, only after the moratorium application had been filed. The Court viewed the momentum as a bellwether of viability and hints to the promise of a workable collectively acceptable solution.
In the circumstances, the Court granted the moratorium sought for a period of four (4) months with various consensual disclosure orders.
ENERGE: RED FLAGS AND RELATED PARTIES
Energe is a Singapore incorporated company in the energy solution industry with a primary business in bunkering. From late 2024, a series of external market forces, including a decline in oil prices, intense price competition and disrupted supply chains, eroded its working capital and profitability. Two separate creditors filed winding up proceedings against Energe and Energe sought moratorium protection similarly for four (4) months shortly thereafter. As is usual in moratorium applications, Energe prepared a liquidation analysis to demonstrate the potentially higher returns that creditors may obtain under a scheme of arrangement in comparison to where Energe was placed in liquidation.
The Court dismissed Energe’s application. First, the Court found that the application was not made in good faith as Energe had engaged in a pattern of suspicious asset transactions seemingly with a view to artificially paint a bleak financial position. Viewed holistically, Energe was to receive at least $8.6 million in the form of litigation proceeds or asset sale proceeds, but appeared to have lost the $8.6 million to a black hole under the guise of operating expenses, for which no information was provided to justify its legitimacy. Based on Energe’s own management accounts, Energe’s operating expenses over the course of 2025 would have been less than $200,000 yet Energe alleged that it burned through a sum of at least $8.6 million, with no supporting documentation. There were therefore serious questions over the propriety of the liquidation analysis and the Court was concerned that there was a very real possibility that the moratorium application was precipitated by illegitimate asset stripping and the shielding of valuable assets to paint a bleak financial picture. The Court therefore found the application was not brought in good faith.
Second, there was insufficient creditor support. The strongest support for the moratorium application came from creditors with historical or present relations to Energe, which raised doubts about the legitimacy and independence of their support. In particular, with respect to the support provided by the largest unsecured creditor, which was owed approximately 49% of Energe’s total unsecured debt, the Court was of the view that Energe should have provided more transparency as regards the basis of the debt. This was especially so as objecting creditors had alleged that the largest unsecured creditor was a related creditor and biased.
In the circumstances, the Court found it hard not to infer a very real risk that Energe was using the moratorium and scheme process to sideline genuine creditors, sell assets at an undervalue to associated parties, and to dissipate any monies received. The moratorium application was therefore dismissed.
CONCLUSION
The two (2) judgments are a sobering reminder that the Courts will not rubber-stamp moratoria and will be prepared to dismiss such applications where there is an ulterior motive other than a genuine restructuring. Further, without the moratorium relief, an embattled company may face liquidation, such as Energe, which was ordered by the Singapore Court to be wound up about a month later on 22 January 2026 post the scheme moratorium application hearing. Debtors are therefore strongly encouraged to put in the effort to build real creditor consensus at an early stage and let the facts, however bleak, speak for themselves.
BRIDGING BORDERS: SINGAPORE’S EMBRACE OF PRC REORGANISATION PROCEEDINGS
In Re King & Wood Mallesons and other matters [2025] SGHC 67, the Singapore Court granted recognition orders and ancillary relief in respect of consolidated reorganisation proceedings ("Reorganisation Proceedings”) of three companies (collectively, the “Companies”) in the People’s Republic of China (“PRC”). This is the first reported judgment in respect of recognition of PRC insolvency proceedings under the UNCITRAL Model Law of Cross-Border Insolvency (“Model Law”), adopted in Singapore by way of Section 252 and the Third Schedule of the IRDA.
This article explores the key considerations undertaken by the Singapore Court in deciding the application to recognise PRC insolvency proceedings and ordering the various reliefs sought.
CASE BACKGROUND
The Companies were undergoing Reorganisation Proceedings in PRC, and Mr. Zhang Jingping was appointed as the administrator of the Reorganisation Proceedings (the “Administrator”). The Administrator made the recognition application before the Singapore Court as the Administrator discovered potential issues in respect of the Companies’ affairs in Singapore, including the transfer of one of the Companies’ 100% shareholding in a Singapore incorporated company (“SG Subsidiary”) for a nominal consideration of $1 before the commencement of the Reorganisation Proceedings.
The Administrator therefore sought the Singapore Court’s recognition of the Reorganisation Proceedings and ancillary relief, including:
- an order allowing the Administrator to examine witnesses, take evidence and the delivery of information concerning the Companies’ property, affairs, rights, obligations or liabilities in Singapore (the “Article 21(1)(d) Relief”); and
- orders entrusting the Administrator with the administration or realisation of the Companies’ property in Singapore, subject to the Singapore Court’s approval for expatriation of such property out of Singapore (“Article 21(1)(e) Relief”).
RECOGNITION OF THE REORGANISATION PROCEEDINGS
Under Article 15 of the Model Law, foreign representatives may apply for the recognition of the foreign proceeding in which the foreign representative has been appointed, subject to the procedural requirement that the application is accompanied by the requisite documentation (see Articles 15(2) to 15(4) of the Model Law).
The Singapore Court largely had no issues with the procedural requirements of the application, save that it did not accept the submission that the Reorganisation Proceedings were collective in nature merely because they were commenced under the PRC bankruptcy law. The Singapore Court required the Administrator to address the nature of the Reorganisation Proceedings itself, but nonetheless reached the conclusion that the Reorganisation Proceedings was collective because a meeting of creditors of the Companies would have to be called so creditors could vote on the draft plan on reorganisation, a statutory threshold would have to be met for each category of creditors before the reorganisation plan could be approved by the PRC Court, and all assets and liabilities of the Companies would be in a consolidated reorganisation where the rights and debts of each entity would be extinguished and the properties owned by each entity would be treated as a unified estate.
RELIEFS GRANTED
Article 21(1)(d) Relief
Three requirements must be met for Article 21(1)(d) Relief to be granted:
- the documents or information must concern the debtor’s property, affairs, rights, obligations or liabilities;
- the applicant must show that there is some reasonable basis for his belief that the person concerned can assist him in obtaining relevant information and/or documents, and that the information and/or documents are reasonably required; and
- the court must take into account all relevant circumstances when exercising its discretion to make the order, including whether the interests of the affected person are adequately protected, so as to not make an order that is wholly unreasonable, unnecessary or oppressive to him.
There were no issues as regards limbs 1 and 2. As regards limb 3, the Singapore Court was of the view that the specific transactions identified by the Administrator warranted investigations (eg., the transfer of the Singapore Subsidiary for a nominal consideration). Further, the timing of the transactions and the substantial values involved (i.e. a $1 billion syndicated loan and a significant amount in receivables) warranted the examination orders. The Singapore Court therefore found that the information sought was reasonably required to obtain as full a picture as possible of the Companies’ affairs to identify potential claims to maximise recovery for creditors.
Article 21(1)(e) Relief
The Singapore Court granted Article 21(1)(e) Relief as it was satisfied that local creditors would be treated fairly and given ample opportunity to participate in foreign insolvency proceedings as the Administrator clarified that no property would be expatriated without leave of court.
CONCLUSION
While not the first time the Singapore Court recognised a PRC liquidation proceeding (see here where we assisted the administrators of Sainty Marine Corporation to obtain a Singapore Court recognition order), this decision is the first reported judgment in Singapore to recognise and provide relief in support of PRC reorganisation proceedings. This highlights the readiness of the Singapore Court to lend cross-border support to PRC insolvency or reorganisation proceedings to promote cross-border cooperation between PRC and Singapore. This is especially so given the reciprocity requirement for a PRC Court to recognise a Singapore insolvency or reorganisation judgment (see here), where the Xiamen Maritime Court of the PRC recognised the appointment of the judicial managers of two Singapore companies.
NAVIGATING TROUBLED WATERS – INTERSECTION BETWEEN THE LAWS OF INSOLVENCY AND ADMIRALTY
In Natixis, Singapore Branch v Seshadri Rajagopalan and others and other appeals [2025] SGCA 29, the Court considered the question of whether the judicial managers of an insolvent ship-owning company acted wrongfully by procuring the offshore arrest and judicial sale of a vessel which had admiralty in rem writs issued against it in Singapore. The answer is no.
BACKGROUND
The admiralty claimants (“Admiralty Claimants”) commenced various admiralty actions in rem in Singapore against the vessel, Chang Bai San (the “Vessel”) in respect of claims for misdelivery and/or loss of cargo that were the subject of the bills of lading supposedly pledged to them. The bills were issued by Ocean Tankers (Pte) Ltd (“OTPL”), as demise charterer of the Vessel. The Vessel was mortgaged to a mortgagee (the “Mortgagee”).
The Vessel was subsequently redelivered to its owner, Nan Chiau Maritime (Pte) Ltd (“Nan Chiau”); the effect of which was that no further writs could be served against the Vessel in respect of claims against OTPL.
The judicial managers of Nan Chiau (the “JMs”) discussed with, amongst others, the Admiralty Claimants on how the Vessel could be dealt with in a manner conducive to the interests of all parties; but such discussions were unproductive.
The Vessel thereafter sailed to Gibraltar, where the Vessel was arrested by the Mortgagee. The Admiralty Claimants were unable to participate in the Gibraltar proceedings as they had not previously issued writs in Gibraltar.
The Vessel was sold by way of a judicial sale by the Gibraltar Court to a buyer (the “Buyer”). As a result, all liens and encumbrances existing against the Vessel at the time of the sale, including any rights that had accrued to the Admiralty Claimants pursuant to the issuance of their writs in Singapore, were extinguished.
The Admiralty Claimants sought, amongst others, a declaration that the JMs had acted in breach of section 100(2) of the IRDA in failing to obtain permission from the Singapore Court to dispose a property subject to a security as if the property were not subject to the security, prior to the Vessel’s arrest and sale in Gibraltar.
The Court determined the following issues:
- whether the Vessel became subject to a security within the meaning of section 100(2) of the IRDA by virtue of the Admiralty Claimants issuing writs in rem against her;
- if yes, whether the JMs disposed of the Vessel as if she was not subject to such security through the Gibraltar arrest and judicial sale; and
- whether the Admiralty Claimants should be granted relief under the principle in Ex parte James.
THE LEGISLATIVE SCHEME UNDER SECTION 100 OF THE IRDA
Section 100 of the IRDA creates a statutory exception to the nemo dat rule (i.e. nobody can transfer what they do not have) by allowing a judicial manager to obtain the Court’s permission to dispose of a property subject to a security as if the property were not subject to the security, thereby allowing the purchaser or disponee to take free of the security interest.
The Court must be satisfied with the following four requirements to grant permission:
- the judicial manager has given the required notice to the security holder;
- the disposal would be likely to promote one or more of the purposes of judicial management;
- the condition for the proceeds of the disposal to be applied towards discharging the sums secured by the security can be met; and
- in the circumstances, the case is one in which it is appropriate to make an order. The Court must weigh the interest of pursuing the aims of judicial management against the competing interest of the security holder.
The Court noted that there are a few uncertainties surrounding the operation of section 100(2) of the IRDA which will require ironing out in future cases. This includes whether the section has any extraterritorial effect; and whether the section operates on a targeted basis in relation to specific security interests or has a more wide-ranging effect of cleaning off any and all security interests that exist in the property.
WHETHER THE ADMIRALTY CLAIMANTS HELD SECURITY IN THE VESSEL BY ISSUING WRITS IN REM
The Court held that the Admiralty Claimants were not secured creditors for the purposes of section 100 of the IRDA.
The statutory lien is not a security interest but an antecedent right to obtain security which is enforceable by arrest. It is only upon arrest that the Admiralty Claimants can properly be said to hold security interest in the Vessel.
In this regard, the Court considered, amongst others:
- The expression of “statutory lien” is a convenient one, used to mean no more than an irrevocably accrued statutory right in rem; it should not be treated like other liens in the general law of credit and security. The definition of “security” under section 61(1) of the IRDA included “lien” is therefore insufficient for a statutory lien to be considered a security.
- While there are cases where the Courts referred to the statutory lien as “security” or the holder of such lien as “secured creditor”, it is unsurprising that the Courts were not assiduous in observing the distinction between a “security interest” and a “right to obtain security” because the issue of the time of accrual of a security interest within the action in rem did not strictly arise.
WHETHER THE JMS DISPOSED THE VESSEL
The Court took the view that the JMs did not dispose the Vessel – section 100(2) of the IRDA therefore did not apply to the JMs.
First, the Vessel was disposed free of the Admiralty Claimants’ statutory liens and it was legally impossible for the JMs to have disposed the Vessel with such result. The statutory lien would remain if the JMs had sold the Vessel to the Buyer, even if it was a bona fide purchaser for value. The true cause of the extinction of the Admiralty Claimants’ statutory liens was the character of the order of the Gibraltar Court as a judgment in rem that is binding on the entire world as regards title and property in the Vessel.
Second, it was the Mortgagee’s enforcement of its security by way of an arrest and a judicial sale that caused the extinguishment of the Admiralty Claimants’ statutory liens in the Vessel. Regardless of the involvement of the JMs, such enforcement did not constitute a disposal of Nan Chiau’s property by the JMs that would require the JMs to apply to Court for permission under section 100(2) of the IRDA.
WHETHER THE ADMIRALTY CLAIMANTS ARE ENTITLED TO RELIEF UNDER THE EX PARTE JAMES PRINCIPLE
The Court did not regard the JMs’ conduct in this case as warranting the Court’s intervention under the Ex parte James principle.
The Ex parte James principle allows the Court to intervene to restrain its officers (including the JMs) from acting in a way which, although lawful and in accordance with enforceable rights, did not accord with what a right-thinking person would regard as appropriate conduct for an officer of the Court.
The question in the case was whether the JMs’ conduct was unfair such that the Court should not permit them to act in such manner. The Court considered no because, amongst others:
- The Admiralty Claimants failed to take steps to protect their own positions.
It was for the Admiralty Claimants to take steps to secure their right to proceed in rem against the Vessel as may be necessary, by issuing a writ against the Vessel to crystallise the statutory lien and to arrest the Vessel.
The Admiralty Claimants made the tactical decision of choosing the jurisdictions to file the writs, and must accept the consequences in omitting to file protective writs in other jurisdictions including Gibraltar.
Further, the Admiralty Claimants did not arrest the Vessel in Singapore despite having the opportunity to do so. - The JMs’ course of action was reasonable.
The fact that the JMs had set aside two months for negotiations with the Admiralty Claimants indicated that they were acting in good faith and had regard to the Admiralty Claimants’ interests.
Even if the JMs expressed a preference for a judicial sale and prevailed on the Mortgagee to go down that route, it was not unreasonable. The ability to obtain a clean title that is in principle recognised across the world would, in the ordinary course, allow the Vessel to fetch a higher price on the market. - The Admiralty Claimants and the JMs stood in adversarial positions.
The JMs as the judicial managers of Nan Chiau were under a statutory duty to act in the interests of Nan Chiau’s creditors. The party liable in personam with respect to the Admiralty Claimants’ claims is OTPL (as demise charterer) and not Nan Chiau (as owner). The Admiralty Claimants are therefore creditors of OTPL and not Nan Chiau. It would be detrimental to the creditors of Nan Chiau for the Vessel to be applied to the discharge of liabilities of OTPL as there would be a diminution in the assets available for satisfaction of their claims.
CONCLUSION
The Court’s decision on whether a statutory lien constituted security provided much needed clarity in light of the intersection between the laws of insolvency and admiralty. Even though the discussion was limited to section 100 of the IRDA, it showed how the Courts would approach such issues and it is not enough to rely on a plain reading of the words.
The Court also highlighted that there are two ways in which judicial managers can dispose of secured property – with the consent of the secured creditor under section 96(4)(e)(i) of the IRDA; or with the authorisation of the Court under section 100(2) of the IRDA.
The Singapore law aspects of this article were written by members of Virtus Law (a member of the Stephenson Harwood (Singapore) Alliance).
