Hin Leong’s judicial managers win bid to freeze Lim family’s global assets
The judicial managers (JMs) of insolvent Hin Leong Trading have scored a legal victory in the High Court to freeze the Lim family’s assets worldwide in their bid to recoup US$3.5 billion (S$4.66 billion) of debt from the collapsed oil trader.
The Mareva injunction application, filed by judicial managers turned liquidators Goh Thien Phong and Chan Kheng Tek of PricewaterhouseCoopers (PwC), covers the Lim family’s assets from real estate in Singapore and Australia to club memberships, insurance policies, shares, cash and investments.
In an e-mail seen by The Sunday Times (ST), Mr Goh told creditors of Hin Leong Trading that the High Court has issued an oral judgment on Friday, granting the application to freeze the Lim family’s assets worldwide, up to a value of US$3.5 billion.
This follows the court’s move to reserve judgment after a full-day chambers hearing on April 5.
The injunction means that the Lim family will not be able to dispose of or deal with their assets up to US$3.5 billion, except for exceptions like expenditure for living expenses and legal fees.
They also have to disclose all of their assets worldwide to the liquidators, ST understands.
Last August, PwC, represented by Senior Counsel Cavinder Bull of Drew & Napier, sued to force Hin Leong founder Lim Oon Kuin, better known as O. K. Lim, as well as his son Evan Lim Chee Meng and daughter Lim Huey Ching, to repay the US$3.5 billion debt and $90 million in dividends they allegedly paid themselves even though their firm was insolvent.
PwC alleged that they had breached their fiduciary duties as directors and engaged in fraudulent trading. On April 30, Singapore prosecutors charged the elder Lim with 23 counts of forgery-related offences.
The injunction application was made to ensure there are enough proceeds for the liquidators to enforce against, should they win the lawsuit.
“Our lawyers will be following up with the next steps in the next few days, including to require the Lim family to disclose their assets on affidavit,” Mr Goh said in the e-mail on Friday. “We are also mindful that the Lim family may file an appeal,” he added. ST has sent an e-mail to their lawyers at Davinder Singh Chambers for comment.
An appeal does not stay the asset freeze order unless the court allows it, sources close to the matter told ST.
In recent months, a number of multimillion-dollar asset sales were made. These include the family’s 41 per cent stake in Universal Terminal, one of their biggest oil and shipping assets. The stake was sold in March to operator Jurong Port.
Both parties declined to reveal details of the deal, including the price, but market sources have pegged it at between $400 million and $500 million.
Last August, PwC, which is represented by Senior Counsel Cavinder Bull of Drew & Napier, sued to force Hin Leong founder Lim Oon Kuin, better known as O. K. Lim, as well as his son Evan Lim Chee Meng and daughter Lim Huey Ching, to repay the US$3.5 billion debt and $90 million in dividends they allegedly paid themselves even though their firm was insolvent.
One-third of the roughly 150 ships owned by the family’s Xihe Group have been sold for at least US$420 million, said Reuters, citing VesselsValue, which tracks ship sales.
The family told ST in March that its advisers had earlier informed the JMs and the informal steering committee of the lenders that the proceeds of any sale of their clients’ assets will be paid to special purpose vehicles (SPVs) whose board has independent directors. SPVs are a separate legal entity organisations set up for narrow business objective.
Crumbling empire saddled with debt
The judicial managers’ legal win on Friday is a significant development in the light of millions of dollars worth of assets the Lim family has sold in recent months.
This latest development is yet another setback for the frail-looking former tycoon and Hin Leong founder Lim Oon Kuin, who earlier this month was charged with 23 counts of forgery-related offences.
At his peak, Mr Lim made Forbes’ 2014 Singapore billionaires list with a net worth of US$1.8 billion.
However, in April last year, he dropped off the list after Hin Leong filed for bankruptcy protection and he admitted that he directed the firm to hide about US$800 million (S$1 billion) in futures trading losses.
Since then, his empire has been crumbling around him.
Hin Leong is now under investigation by the police and increased scrutiny by several regulators. Lim and his two children are also battling a number of lawsuits by bank creditors trying to recover more than US$3.5 billion from the firm.
This after its judicial manager, PricewaterhouseCoopers (PwC), filed a suit last August to force Lim and his two children to repay the US$3.5 billion debt and $90 million in dividends that they allegedly paid themselves even though their company was insolvent.
In PwC’s suit, Lim and his two children were accused of “deliberately concealing Hin Leong’s losses and portraying it as a profitable company when in fact it was massively insolvent”.
The alleged fraudulent activity included “the creation of fictitious gains to conceal accumulated trading and other losses, the forgery of documents, the manipulation of Hin Leong’s accounts through irregular accounting entries, the overstatement of Hin Leong’s inventory and the obtaining of financing through improper means”.
As a result, they presented a “vastly misleading picture of its financial health to external parties and deceived its lenders into extending financing, even though Hin Leong has been insolvent since the financial year ended Oct 31, 2012”, the suit said.
Lim founded Hin Leong Trading in 1963 at the age of 20, with a single truck delivering diesel to fishermen and small rural power producers.
By the time he was 30, the Chinese immigrant, widely known in the industry as O.K. Lim, had built up a fleet of tank-trucks and incorporated Hin Leong in 1973 as an oil trading company.
In 1978, Ocean Tankers was incorporated as a ship chartering and management firm and became one of the world’s largest tanker fleet operators. Its fleet of more than 150 vessels is largely chartered from the Lim family-owned Xihe Holdings, Xihe Capital and their subsidiaries.
But last May, Ocean Tankers filed for judicial management, and in August, the court approved OCBC Bank’s application against family-owned Xihe Holdings and its subsidiaries.
Hin Leong was wound up in March this year.
The asset freeze order is also a step forward for creditors, including HSBC, Hin Leong’s largest creditor with about US$600 million owing. It is among more than 20 banks trying to recover billions of dollars in loans to the trader after Hin Leong collapsed last year following an oil price plunge which triggered a default that exposed years of hidden losses and alleged fraud.
The company was wound up in March this year.
Source: Straits Times