Unprecedented order for the compulsory appointment of a CRO in Singapore restructuring proceedings

By Rob Child, Jean Woo, Karan Puri (Ashurst) and Matt Becker (Deloitte)

The Singapore High Court makes an unprecedented order for the compulsory appointment of a Chief Restructuring Officer in local restructuring proceedings.

In a market first, in 2022 the Singapore High Court ordered the compulsory appointment of a Chief Restructuring Officer ("CRO") to steer troubled commodities trader Antanium Resources Pte Ltd ("Antanium") forward in a debtor-in-possession process that has been in place since December 2020. [1] Deloitte Partner Matt Becker in Singapore was appointed as CRO of Antanium.

In its orders, the Court also granted the CRO extensive powers with a view to progressing Antanium's restructuring and promoting transparency with its creditors. These include:

• Granting the CRO access to all of Antanium's directors, officers, employees, premises, books and records; 
• The CRO's appointment as a director of Antanium;
• Full responsibility for and power in respect of Antanium's assets (including but not limited to bank accounts, receivables and insurance claims);

• The power to set budgets, approve expenses and liabilities, and to be a joint signatory of bank and investment accounts; 
• Hire, terminate the employment, and/or alter the terms of employment of all of Antanium's directors, officers and employees;
• Work with Antanium to develop and negotiate a credible scheme of arrangement; and
• Regularly meet with and report to creditors and the Court.

Additionally, the CRO was given power to conduct correspondence, meetings and negotiations with insurance underwriters, loss adjustors and brokers. These powers were specifically required as insurance claims form a key component of Antanium's business and ongoing restructuring.

In the Antanium case, the appointment of an independent CRO helped to restore creditor confidence in the restructuring process where a scheme proposal prior to the appointment of the CRO had been rejected. Through a consultative process, the CRO proposed and implemented super priority rescue financing arrangements, which were sanctioned by the Court, allowing a group of 5 major creditors to fund the restructuring and asset recovery process.

Whilst common in the US, UK and European markets, the appointment of a CRO is still relatively rare (though not unheard of) in the Asian restructuring market. Experience in the US, the UK and Europe demonstrates that a CRO's appointment can promote transparency and re-balance stakeholder dynamics while at the same time keeping existing management in place. Viewed in this light, the CRO can bring a distinctive benefit through more consensual negotiations and disclosures of information that tend to be crucial in debtor-in-possession processes. The fact that the Singapore Court has ordered a CRO's appointment despite the absence of any statutory framework for such a role should be commended and demonstrates a judicial openness to out-of-the-box solutions to common restructuring problems.

The Court's orders in Antanium also add to a range of decisions in recent years (both reported and unreported) on first-to-market applications of rescue financing,[2]  pre-packaged schemes, and lock-up agreements.[3] This development signals yet more willingness on the part of the Singapore courts to advance the full suite of tools available in the Singapore restructuring playbook. 

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© Ashurst 2022. Reproduced with permission. This article was first published in Ashurst's RSSG Alert dated 28 June 2022.

[1] HC/OS 1285/2020.