In (S) Pte Ltd[3], where the effect of a

In Singapore, the judicial management provision
are provided under the Singapore Companies Act1
which came into operation in 1987. Moreover, it is modelled after the United
Kingdom’s administration. The key objective is to authorize a financially
distressed company to regain back its stability supervised by the courts.2
It is also to enable the companies that are suffering from insolvency or
liquidation to become a successful ventures.

            Generally, judicial
management allows a company, directors or creditors,
to apply to the court to place the management of the company in the hands of the
appointed judicial manager. In Hinckley Singapore Trading Pte Ltd v Sogo Department
Stores (S) Pte Ltd3, where the
effect of a judicial management is that there is a moratorium on the
enforcement of debts and rights, proprietary or otherwise, against the company,
and allow the judicial managers to construct proposals to be implemented where
the court in this case referred to the case of Re Atlantic Computer Systems plc
(No. 1)4.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

            There are few
advantages where the company will have protection against creditors’ claims
which allows it to continue its business and to stabilize its financial health
whereas the creditors have a chance of obtaining a greater recovery of the
debts owed. In addition, judicial management offers the
company an opportunity to deal with their insolvency or potential insolvent
quickly.

            Recently, in
the unreported case of Swissco Holdings Limited5, Singapore
High Court had allowed the company to be placed under judicial management where
they will be allowed to continue operating but with court’s supervision, while settling
their debts. Similar situation can be seen in another unreported case of Swiber
Holdings Limited6,
where the company was allowed to be put under
judicial management although it had initially filed for liquidation due to debts
and following a drop in global oil prices.

            Another case is Neo
Corp Pte Ltd v Neocorp Innovations Pte Ltd and Another Application7,
where the judicial managers commenced an
action against a creditor of the company claiming that a floating charge
granted to the creditor constituted unfairness. The creditor alleged that the
liquidator of the company had no right to continue the action under Section
227T of the Singapore Companies Act, as the right belongs to the judicial
manager. Both judges, Andrew Phang JC and Chao Hick Tin, agreed with the
argument made.

            In conclusion, the
court will first balance the interest of the applicant against the interest of
the other creditors in seeking to give effect to the objectives of judicial
management and the purpose of the moratorium having regard to all the
circumstances of the case in order to grant such leave for the applicants.

1 Foo.
K.P.K, Lee. S. (2017) Companies Act 2016: The New Dynamics of Company Law in
Malaysia. Puchong, Selangor Darul Ehsan: CLJ Publication.

2 Judicial
Management: What Is It and How Does It Work? (2017, December) Retrieved from
https://singaporelegaladvice.com/law-articles/judicial-management

3 2001 4 SLR 154

4 1991 BCLC 606

5 Woo. J. (2017, April)
Court Approves Judicial Management for Debt-Ridden Swissco. Retrieved from http://www.straitstimes.com/business/companies-markets/court-approves-judicial-management-for-debt-ridden-swissco

6 Ungku. F (2016,
October) Singapore Court Approves Judicial Management for Troubled Swiber.
Retrieved from https://www.reuters.com/article/swiber-holdings-restructuring/update-1-singapore-court-approves-judicial-management-for-troubled-swiber-idUSL3N1CC0VO

7 2005 4
SLR 681