Water treatment firm Hyflux placed under judicial management
Judge 'not persuaded of sufficient grounds' for further extension of debt moratorium
Beleaguered water treatment firm Hyflux has come under judicial management (JM) following a marathon debt restructuring effort that has yet to put money on the table for creditors, the High Court ruled yesterday.
Hamish Alexander Christie and Patrick Bance of Borrelli Walsh, the restructuring firm advising the unsecured working group (UWG) of 19 banks that hold more than $931 million of Hyflux debt - were appointed the judicial managers and took over the firm's operations yesterday.
Sources told The Straits Times that representatives of Borrelli Walsh were at Hyflux's premises yesterday to take control, change locks and check computer servers.
Earlier in the day, Hyflux's lawyers and some creditors supported a further extension of the debt moratorium in view of a plan proposed by American fund manager Strategic Growth Investments (SGI) to acquire and privatise the company in a deal that would include a cash injection of $208 million.
But Justice Aedit Abdullah said he was "not persuaded that sufficient grounds have been made out for any further extension".
"A debtor-in-possession restructuring... must come to an end at some point. A moratorium mechanism is not intended to be continued indefinitely."
It is meant to "give temporary reprieve" for companies to work out viable rescue plans, "but this has not been the case here", he stressed.
While acknowledging there have been "various complications" in Hyflux's restructuring, Justice Aedit said he was "not persuaded that the current SGI proposal is a basis for further continuation of the moratorium".
"I must emphasise that the moratorium has been in place for a very long time... So what may have been sufficient for an extension in the past... may not be sufficient when numerous extensions have been given.
"It is against that context that I must weigh the application for (the) JM order and I'm satisfied that the statutory objectives... have been made for the appointment of JM," he ruled.
Despite being given 12 extensions of the debt moratorium over two-and-a-half years, the Hyflux board was no closer to getting a deal that puts money on the table, and some creditors feared the group's remaining value is being dissipated.
Compounding matters, Hyflux and its current and former directors are now under probe for suspected false and misleading statements and breaches of disclosure rules.
Justice Aedit also denied Hyflux's request for a stay of the JM order pending its appeal.
Responding to Hyflux lawyer Nish Shetty's query if "time has been squandered", Justice Aedit said: "No, it's not about squandering...
"Convince me why after two years, I need to give more time when there's nothing concrete on the table, no one is rushing to the bank to pour money in?"
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