SINGAPORE - The High Court has given the green light for the winding up of Hin Leong Trading, marking the end of the road for the collapsed oil trading giant after nearly a year of restructuring.
In a hearing on Monday morning (March 8) before High Court Justice Kannan Ramesh, judicial managers Goh Thien Phong and Chan Kheng Tek of PricewaterhouseCoopers (PwC) Advisory Services were appointed liquidators of Hin Leong.
They had applied for Hin Leong to be wound up after three potential bidders walked away from a deal to buy Hin Leong and two related companies as a combined entity.
Selling Hin Leong, its shipping arm Ocean Tankers and Lim family-owned Xihe Holdings as a combined entity would have helped to recover more than the firm's US$257 million (S$346 million) in estimated assets, according to Bloomberg. The liquidation of a company usually results in a fire sale of its assets, which raises less money than a formal bidding process.
Once one of Asia's top oil traders, Hin Leong collapsed last year after the oil price plunge triggered a default that exposed years of hidden losses and alleged fraud by its founder Lim Oon Kuin - better known as O.K. Lim - as well as his son Evan Lim Chee Meng and his daughter Lim Huey Ching.
PwC filed suit last August to force Lim and his two children to repay the US$3.5 billion debt and $90 million in dividends that they allegedly paid themselves even though their company was insolvent. PwC alleged that they breached their fiduciary duties as directors and engaged in fraudulent trading.
The alleged fraudulent activity included "the creation of fictitious gains to conceal accumulated trading and other losses, the forgery of documents, the manipulation of Hin Leong's accounts through irregular accounting entries, the overstatement of Hin Leong's inventory and the obtaining of financing through improper means", according to the lawsuit.
HSBC, Hin Leong's largest creditor with about US$600 million owing, also took legal action against the family, followed by Bank of China. According to estimates stated in court filings last year, DBS, ABN Amro Bank and OCBC Bank are owed about US$200 million to US$300 million each.
During Monday's hearing, the Lim family objected to the judicial managers being appointed as liquidators, citing a conflict of interest in that they would not be able to objectively review the judicial managers' fees. Instead, the family proposed Mr Henry Tan and Mr Chan Yee Hong from Nexia TS as the firm's liquidators.
But lawyers for the JMs argued that there is no conflict of interest, as the fees will be reviewed by the court and the creditors.
The liquidators will continue with the lawsuit against the Lim family, collect accounts receivables from counterparties and dispose of Hin Leong's remaining assets including an industrial building at Playfair Road, ST understands.
Another issue yet to be resolved is the substantial amount of oil cargo that are still stored in tanks at Universal Terminal. These are under a court injunction obtained by a creditor, ST understands. The Lim family managed and owned 41 per cent of Universal Terminal through Universal Group Holdings.
Hin Leong has between 10 and 15 workers left, who are still needed to help with the liquidation process, ST understands.