Debt moratorium extended as WongPartnership opts out as Hyflux’s legal counsel

Debt moratorium extended as WongPartnership opts out as Hyflux’s legal counsel

On Wednesday (30 Jan), the water treatment company Hyflux’s debt moratorium has been granted extension by the High Court until 28 February. This extension was applied by WongPartnership, who has now opted to stop representing Hyflux legally.

WongPartnership lawyer Manoj Sandrasegara and his team are discharging themselves as legal representatives to Hyflux due to the issue concerning the “withdrawal for loss of confidence and other good cause,” Justice Aedit Abdullah remarked.

Justic Aedit added that “these arise out of a conflict in position between WongPartnership and the applicants concerning assurances given in respect of adviser fees for the Securities Investors Association Singapore (Sias).”

There was a disagreement on the fees that were due for Sias’ advisers and this is the current position held by WongPartnership.

“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,” Justice Aedit additionally said.

On Wednesday night, Hyflux announced through the Singapore Exchange (SGX) that “it has lost confidence and trust in WongPartnership.”

In a week’s time, a pre-trial conference will be held to determine if new lawyers will enter the picture or if the difficulties have been eliminated. On 20 Feb, the next hearing will be held to determine if the debt moratorium should be extended.

Justic Aedit noted that “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. I note that there is a working group led by SGX, and I hope measures will be taken.”

Last November, Hyflux signed a S$400 million rescue deal with United Emirates utility firm, Utico. However, the creditor groups yet need to sign off on the plan.

According to David Gerald, who is the president of Sias, the latest development “should not delay the current restructuring process and investors need not worry…As far as Sias is concerned, all its advisers have been fairly and adequately paid to date, and there is assurance in place for future payments for work to be done.”

A year ago, in response to Sias’ call, after the oil and gas debacle a committee was convened by Hyflux-SGX to assess the feasibility of having insurers financially assisting retail investors who were in need of financial and legal advice when bonds fail, Mr Gerald explained: “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.”

Yesterday, a spokesperson from SGX Regco stated that it has formed a working group to look into ways of improving the framework for retail bonds in addition to the role of the issuer.

SGX concluded that “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.”

The holdings of almost 50,000 retail investors have suffered due to Hyflux’s financial collapse, among which are bondholders and shareholders. Billions have been invested into the company, which was once a model Singapore company that is the national pride of the country.

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