BlackOak is proud to be acting as Singapore legal counsel in the restructuring of Nam Cheong Limited (“NCL”), a Bermudian-incorporated company listed on the Main Board of the Singapore Exchange Securities Trading Limited (the “SGX”), with a debt value of USD$300 million. We are delighted to announce that as at 30 March 2024, NCL’s Malaysia-sanctioned scheme of arrangement (the “NCL Malaysia Scheme”) and its debt restructuring master agreement involving the global restructuring of NCL and its subsidiaries’ indebtedness to participating financial institution creditors (the “DRMA”) have become fully effective and unconditional. This represents a significant milestone, with the NCL Malaysia Scheme and the DRMA representing integral parts of NCL’s overall restructuring.
NCL is the ultimate holding company of approximately 36 entities spanning various jurisdictions, such as Bermuda and Malaysia, (together, the “NC Group”). Specialising in the construction and supply of Offshore Support Vessels (“OSVs”) for the offshore oil and gas exploration and production industries, the NC Group stands as Malaysia’s largest OSV builder – owning and operating one of Malaysia’s largest shipbuilding yards for OSVs.
Prior to the current NC Group restructuring, the NC Group had initially faced financial difficulties in 2017 and had defaulted on payments to various creditors. As a result, the NC Group began to restructure their debts in 2017, culminating in several concurrent schemes of arrangement for NCL in Singapore, and two of NCL’s main subsidiaries in Malaysia (the “2018 Schemes”). Due to various external factors such as the volatility in the oil and gas industry and the unexpected COVID-19 pandemic, the NC Group was unable to make the necessary payments in accordance with the 2018 Schemes. This led to the current restructuring of the NC Group’s liabilities.
The NC Group has adopted a multi-pronged approach to its overall restructuring:
(1) Firstly, Nam Cheong Dockyard Sdn. Bhd. (“NCD”), a wholly-owned subsidiary of NCL had engaged with financial institution creditors of the NC Group under the auspices of the Corporate Debt Restructuring Committee (“CDRC”) in Malaysia. This culminated in the successful execution of the DRMA, which had been entered into for the purposes of restructuring NC Group’s indebtedness to the participating financial institution creditors. To date, the application involves one of the largest debt amount that CDRC has successfully restructured.
(2) Secondly, the NC Group had, by way of the NCL Malaysia Scheme, restructured its unsecured liabilities to all Scheme Creditors (as defined under the NCL Malaysia Scheme). The NCL Malaysia Scheme also seeks to settle liabilities arising out of various bilateral agreements (which were guaranteed by NCL) that were previously entered into by one of NCL’s wholly-owned subsidiaries, pursuant to the 2018 Schemes.
(3) Thirdly, the NC Group had successfully negotiated bilateral agreements procuring a full and final settlement, release and discharge of the NC Group’s liabilities arising out of, or in connection with, various agreements between the NC Group and its largest trade creditors. Additionally, the NC Group negotiated with the remaining trade creditors to extend the delivery period for certain contracts as well as to terminate the remaining contracts.
BlackOak, together with Malaysian counsel for NCL, Lim Chee Wee Partnership, worked together to advise NCL on various aspects of the overall restructuring. This eventually culminated in the recognition and enforcement of the NCL Malaysia Scheme in the Singapore Court, and a lifting of suspension of the Company’s trading counter and a resumption of trading of shares of the Company on the SGX.
On 1 March 2024, the BlackOak team successfully obtained recognition for the NCL Malaysia Scheme under the UNCITRAL Model Law on Cross-Border insolvency as enacted under Singapore Law (the “SG Model Law”). We had the opportunity to address the Singapore High Court on, among others, (a) whether a Malaysian scheme of arrangement falls under the definition of a “foreign proceeding” under the SG Model Law, (b) the unique and complex circumstances of the NC Group in the context of determining NCL’s centre of main interests, and (c) whether / how an order sanctioning a foreign scheme of arrangement can be recognised and enforced under the SG Model Law.
Prior to the recognition order being granted on 1 March 2024, there were notably no reported cases in Singapore on the recognition and enforcement of schemes of arrangement from other common law jurisdictions under the SG Model Law. In a similar vein, we understand from the Malaysian counsel for NCL, Lim Chee Wee Partnership, that this was the first time a Malaysian Court had sanctioned a scheme of arrangement from a foreign-incorporated company.
For queries on the above, please contact: Darius Tay
If you would like any information or assistance on any restructuring and insolvency matters, please contact the Director at BlackOak whom you normally work with, or submit your inquiries here.
