Singapore’s OCBC Bank has filed an application for Xihe Holdings, the vessel-owning arm of the empire of oil trader and tanker owner Lim Oon Kuin, to be placed under judicial management.
Citing its strong distrust of Xihe’s management after allegedly fraudulent activities were uncovered at affiliated Hin Leong Trading, the bank asked the High Court of Singapore to appoint Seshadri Rajagopalan and Paresh Jotangia of Grant Thornton Singapore as interim judicial managers.
The request covers Xihe and four of its subsidiaries — Da Xin Tankers, Hua Guang Shipping, Nan King Maritime and Hua Xin Shipping.
OCBC, in its court affidavit, said the appointment of independent judicial managers and interim judicial managers would help greatly in restoring confidence of potential investors.
The bank stated that because of interlinked businesses, common ownership and leadership of the Xihe Group, Hin Leong and Ocean Tankers, “interim judicial managers need to be appointed urgently over the debtor companies to investigate the serious irregularities and prevent further prejudice to creditors”, according to The Business Times.
“The Xihe subsidiaries have persistently failed to seek and collect payments from Ocean Tankers for months or years, to the prejudice of creditors of the Xihe Group and in breach of contractual obligations owed to OCBC,” the lender added.
“A moratorium would give the debtor companies the time and breathing space to properly restructure the debts, and better preserve value of the vessels.”
Irregularities
Xihe Group is owned by Lim, who is better known as OK Lim, and his son, Evan Lim Chee Meng. OK Lim is also the founder of Hin Leong Trading and vessel operator Ocean Tankers — both of which were placed under interim judicial management in early May.
PricewaterhouseCoopers Advisory Services (PwC), the court-appointed supervisor of Hin Leong, later reported that it had found a "significant number of irregularities" in the company’s finances.
EY, the interim judicial manager for Ocean Tankers, also claimed it had found serious irregularities in the way in which Ocean Tankers’ conducted its commercial affairs.
Allegations made by the two accounting firms included fabricating fictitious gains, forging documents on a massive scale, misusing secured inventory and misleading banks into extending financing to Hin Leong.
"The Lims further paid themselves dividends of $30m in 2017 and $60m in 2018 from Hin Leong where there were no profits to support such dividends, and withdrew $19m from Ocean Tankers shortly before filing scheme moratorium proceedings," OCBC claimed according to The Business Times.
Legal sources who have been following the interlinked cases say that many creditors were spooked when it emerged that Xihe Group was taking back its ships from Ocean Tankers and attempting to sell them.
“There was a strong fear that the Lims were throwing Hin Leong and Ocean Tankers under the bus, and cashing out through Xihe. I am actually quite surprised that it took until now for someone to chase after Xihe,” a Singapore-based legal source said on Wednesday.
Xihe Group and it subsidiaries own about 100 ships covering the full tanker spectrum from small bunker tankers to VLCCs.
So far only a few bunker tankers have been confirmed as sold.
