SINGAPORE - HSBC Bank, supported by four other lenders, on Friday (May 8) succeeded in getting the High Court to place oil trader Zenrock Commodities Trading under interim judicial management.
In a full-day remote court hearing attended by lawyers for six banks and an unsecured trade creditor, Zenrock had contested HSBC's application for interim judicial managers from KPMG Services to be appointed, pending the making of a judicial management order.
The Straits Times understands that most of the banks - Credit Agricole, Bank of China, ING Bank and Banque de Commerce et de Placements - supported HSBC, while the fifth, Natixis, did not take any position.
Zenrock is expected to file an application to set aside the court's decision.
HSBC and other banks are stepping up efforts to avoid further losses after the failure of Hin Leong, the Singapore oil trader that owes 23 banks almost US$4 billion (S$5.7 billion).
HSBC reportedly has the most exposure to Hin Leong, at US$600 million, as part of its global oil trading portfolio of US$2 billion.
On Monday (May 4), HSBC filed an application in the High Court for Zenrock to be placed under judicial management, a form of debt restructuring that involves having an independent party manage the company's affairs.
In an affidavit supporting the application, HSBC's head of commodities and energy, Mr Kiu Hock Yean, said the drastic fall in the value of oil globally has resulted in many banks requiring traders to provide cash to cover their outstanding liabilities.
HSBC has serious concerns about Zenrock's ability to repay its debts, and the bank's demands for payment in excess of US$50 million remain unmet, he said.