Debt-collecting exercises run law firms off their feet

Perception that lawyers make money when times are tough appears to be holding true in Singapore

Getting an appointment with a maritime law firm in Singapore today can be difficult. Their lawyers claim to be very busy.

But TradeWinds managed to pin down Joseph Tan Jude Benny (JTJB) and Ince & Co and its local partner firm Incisive Law — two of the country’s many maritime law practices — to find out what keeps them run off their feet.

“We’ve basically become debt collectors,” joked Baldev Bhinder, a partner at JTJB who specialises in maritime, energy, resources and infrastructure.

“Companies are fighting to go on, so debts are being called in against flimsy defences made in the hopes of dragging things out,” said senior partner Dato Jude Benny, referring to these run-of-the mill debt-collecting exercises as being a law firm’s bread and butter right now.

With the bankruptcy of major players such as Hanjin Shipping, Swiber, Swissco Holdings and Ezra Holdings, Bhinder says the spotlight is firmly on insolvency.

“The Swiber and Ezra insolvencies came too close together. Confidence has been hit and the episodes will put the microscope on key fundamental issues such as corporate governance of over-leveraging. I think the banks who lent them the money will also face a lot of pressure,” he said.

Incisive director Felicia Tan, who specialises in insolvency law, says the recent spate of shipping insolvencies will be a significant test for judicial management in Singapore, where cases on the scale of Swiber have rarely been seen before.

“For maritime lawyers in Singapore, Swiber is the test case. Ezra and EMAS Chiyoda Subsea filed for protection in the US, so the role of the courts in Singapore will be low,” Tan said.

“What is curious is that you don’t have to file for insolvency in the country of incorporation. It will be interesting to see what problems are raised in which jurisdiction. Do you look at the country of incorporation, the country from which it operates or the country where most of its assets are present? At the moment, nothing is cast in stone.”

Tan and Bhinder say the spotlight is also on how insolvency law co-exists with maritime law, and which of the two controls the asset.

“Each regime produces different results for the creditor,” Bhinder concluded.