When Singapore container shipping giant Pacific International Lines (PIL) teetered on the brink of pandemic-induced bankruptcy in 2021, it appeared to spell the end of the world’s 12th-largest carrier.
But instead of going under, Singapore’s High Court greenlit a plan for the distressed firm to restructure its US$3.3 billion (S$4.4 billion) debt.
It was the lifeline needed to pull off a spectacular recovery. Within a year, PIL’s balance sheet jumped from US$44.7 million in the red to US$2.6 billion in earnings. It paid back creditors US$1 billion ahead of schedule, and even donated a large sum to charity.
This success story encapsulates Singapore’s pro-restructuring approach to insolvency. It aims to rescue more failing businesses in a “complex world with multifarious challenges”, said Judge of the Appellate Division Kannan Ramesh, who co-chairs the Supreme Court’s Commercial Practice Panel.
He was speaking at the fourth instalment of the Singapore Courts (SG Courts) event titled “Conversations with the Community” series on March 27, held at the National University of Singapore’s law faculty. It is an engagement series that brings together academia, legal and other sectors to forge multi-sector collaboration.
In his opening address titled “Healing Businesses in a New World: Problems, Opportunities and Solutions”, Justice Ramesh said Singapore’s approach should “move away from the perception that business failures are necessarily tied to wrongdoing or poor management”. He outlined some challenges that businesses face today, and why it is important to facilitate the rehabilitation of companies in distress.
“We must recognise that the risks of business failure – indeed, business failure itself – are inherent aspects of the entrepreneurial journey… These risks may materialise for a host of reasons, many of which may be beyond the entrepreneur’s control.”