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Landmark ruling lets Trikomsel unit liquidators tap commercial claims funder

Landmark ruling lets Trikomsel unit liquidators tap commercial claims funder

Source: Business Times
Date Published: 12 Sep 2018
Author: Tay Peck Gek

In the first ruling of its kind, the High Court has made a declaration that gives the liquidators of two Trikomsel subsidiaries the green light to proceed with a commercial third-party funding arrangement.

Singapore

In the first ruling of its kind, the High Court has made a declaration that gives the liquidators of two Trikomsel subsidiaries the green light to proceed with a commercial third-party funding arrangement.

Justice Chua Lee Ming's landmark ruling on Tuesday will open the way for KordaMentha - as the liquidators of Trikomsel Pte Ltd and Trikomsel Singapore Pte Ltd - to obtain financial support from Australia-listed litigation funder IMF Bentham for investigations and potential claims.

Trikomsel Pte Ltd and Trikomsel Singapore had helped their Indonesian parent company PT Trikomsel Oke Tbk raise S$215 million in the Singapore bond markets. However, the Indonesian mobile phone operator missed its coupon payments in 2015, making it the first company to default on Singapore dollar bonds since 2009.

Luke Furler, partner at KordaMentha, said in a statement issued after Tuesday's ruling: "We are pleased with the outcome of today's hearing and the significance of this, not only to the creditors of these companies, who now have an additional angle for recoveries, but also to the wider Singapore insolvency market."

The liquidators were represented in the hearing by BlackOak LLC's director and leading restructuring and insolvency specialist, Ashok Kumar.

Mr Kumar said of the decision: "It confirms that commercial funding of claims arising out of an insolvency is permitted in Singapore and provides direction in an area that is fast developing in Singapore. This is a helpful decision for all of us operating in this space."

IMF Bentham's chief investment officer for Asia, Tom Glasgow, pointed out that the liquidators' investigations and any resulting proceedings could not be pursued without third-party funding. Therefore, the ruling is an important step forward in the interests of the Trikomsel bondholders.

IMF Bentham is a global litigation funder, headquartered in Australia and with offices in the US, Canada, Singapore, the UK and Hong Kong.

According to the statement, the commercial funder has recovered over A$1.4 billion (S$1.37 billion) for clients since 2001.

Justice Chua's decision comes hot on the heels of the first reading of the Insolvency, Restructuring and Dissolution Bill on Monday. The Bill, if passed, allows judicial managers and liquidators to seek third-party funding to bring legal claims against persons who have misappropriated a company's assets. In return, the financier gets part of the potential proceeds from a successful recovery.

Justice Chua had in 2015 made a declaration that allowed the liquidators of ship-fuel company Vanguard Energy to enter into litigation funding arrangements with its shareholders and directors. However, in that case, shareholders and directors were not commercial funders, and were not looking to gain a profit from the funding.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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