SINGAPORE - The High Court on Wednesday (Jan 29) granted another extension of Hyflux's debt moratorium to Feb 28 following a surprise application by its lawyers from WongPartnership to discharge themselves from representing the distressed water treatment firm.
Justice Aedit Abdullah, in his oral remarks delivered Wednesday morning, said WongPartnership lawyer Manoj Sandrasegara and his team are applying to discharge themselves as Hyflux's lawyers as there are possible issues arising out of the Legal Profession Conduct Rules 2015 which pertain to "withdrawal for loss of confidence and other good cause".
"These arise out of a conflict in position between WongPartnership and the applicants concerning assurances given in respect of advisor fees for the Securities Investors Association Singapore (Sias)," Justice Aedit said.
"In the circumstances, we cannot proceed, but to be fair to (Hyflux), I need to give a short extension to cover the period in which they either resolve the matters with WongPartnership or bring on board new counsel," he added.
A one-week adjournment was given for matters to either be resolved between WongPartnership and Hyflux or for new lawyers to be brought in to represent the firm.
Justice Aedit noted that "this is a significant development we hope will be resolved."
A hearing is scheduled on Feb 20 to hear applications for a further extension on the debt moratorium beyond Feb 28, after most creditors had either no objections or left the duration of the extension to the Court, except for the unsecured working group (UWG) of banks represented by Tan Kok Quan Partnership, argued for a two-week extension only.
The UWG group comprises seven unsecured banks, including BNP Paribas, Mizuho Bank, KFW IPEX-Bank, Bangkok Bank and Standard Chartered Bank. They are represented by Eddee Ng, senior partner at Tan Kok Quan.
"This present situation does highlight the need for the responsible agencies to consider what structures are needed to help advise retail investors when things go belly up. Concerns had been raised previously by Justice Kannan Ramesh and myself. I note that there is a working group led by SGX (Singapore Exchange), and I hope that measures will be taken," Justice Aedit said.
Sias president David Gerald said he believes that this latest development "should not delay the current restructuring process and investors need not worry".
Hyflux finally reached a $400 million rescue deal with United Arab Emirates utility company Utico in November last year. Its various creditor groups need to sign off on the plan.
"It is indeed a shame that WongP should want to discharge themselves. But what broke the camel's back?" Mr Gerald asked.
Asked about what structures are needed to help retail investors when bonds fail, Mr Gerald said that in response to Sias's call a year ago - following the oil and gas debacle and then Hyflux - SGX has convened a committee to look into the feasibility of getting insurers to provide financial assistance to retail investors who need legal and financial advice when bonds fail.
"This has to be in place because Singapore is positioning itself to be a leading retail bond market, and there are no provisions for legal and financial advice for investors when bonds fail," he added.
Responding to The Straits Times, an SGX spokesperson said that its regulatory arm SGX RegCo has set up a retail bond working group to consider ways to improve the framework for retail bonds as well as related issues.
The working group will consider matters such as the role of the issuer, funding arrangements when a company defaults or undergoes restructuring, and measures to help retail holders organise themselves and secure an optimal outcome.
"We expect the working group's suggestions to be ready later this year and for a public consultation of proposed changes to the retail bond rules (to be carried out) by the year-end," SGX said.