Options in Distress

What are the options exactly available to shipping companies in distress? In his presentation entitled “Afloat, Abreast, or Ahoy – Be in the Know”, Mr. Lionel Tay from Rajah & Tann LLP gave us his insights as a practitioner who is involved most recently in the Armada (Singapore) insolvency case.

One possible option is a scheme of arrangement that essentially entails a proposal being presented by the company to its creditors. In such an arrangement, creditors may be bound by the scheme to accept payment at a discount. The company’s management remains in place and provides some breathing space to contemplate the company’s future as a going concern. The tricky issue here is the company’s ability to gather enough support from its creditors who account for at least 75% of its total debts.

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