By Chanyaporn Chanjaroen, Joyce Koh and Serene Cheong
(Bloomberg) -- Hin Leong Trading (Pte) Ltd., the troubled Singapore oil trader with almost US$4 billion in debt, plans to shift management of the company away from its founding family to PricewaterhouseCoopers LLP as it prepares to withdraw an application for court protection from creditors, according to people familiar with the matter.
The accounting firm is poised to act as a so-called interim judicial manager to help oversee the company’s finances and negotiate with creditors, said the people, who declined to be identified because the process is confidential. Hin Leong’s 23 bank creditors include HSBC Holdings Plc, ABN Amro Bank NV, Societe Generale SA and Singapore’s three biggest banks.
Representatives for Hin Leong and PwC couldn’t immediately be reached for comment.
The move to have accountants at PwC run the oil trader effectively shifts management control away from the family, which would have been the case under a court protection process. Hin Leong enlisted PwC as one of its financial advisers when it filed the application for a debt moratorium from Singapore’s High Court.
“Sometimes where there are concerns over the effectiveness or propriety of current management running the company, creditors may seek for a judicial management instead where a third party steps into the role of running the company,” said Baldev Bhinder, the managing partner of Singapore-based law firm Blackstone & Gold, which specializes in commodity and energy.
Hin Leong, founded in 1963 by Lim Oon Kuin, applied April 17 for court protection from its lenders after banks demanded repayment of loans as oil prices crashed and the coronavirus swept across the globe.
In filings seen by Bloomberg, the company said it also hid about US$800 million in losses incurred from futures trading over the years on the orders of Lim. The firm sold some of the millions of barrels of fuel it had used as collateral to secure loans from its banks, according to the documents.
A judicial management is a form of debt restructuring where an independent manager is appointed to supervise the affairs, business and property of a company under financial distress. The process temporarily shields the company from legal proceedings, giving it a chance to rehabilitate.
Hin Leong is expected to withdraw its application for court protection under Section 211B of Singapore’s Companies Act, and apply for judicial management in a virtual court hearing over the next week, according to one of the people.
While the application for judicial management could take months, PwC will act as the interim manager in the meantime, the person said. Ocean Tankers (Pte.) Ltd., an affiliate of Hin Leong, will continue its application for court protection, the person said.
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