Case Details
- Citation: [2022] SGHC 196
- Title: Re Zipmex Co Ltd and other matters
- Court: High Court of the Republic of Singapore (General Division)
- Date of decision: 17 August 2022
- Originating Applications: Nos 381, 382, 383, 384 and 385 of 2022
- Judges: Aedit Abdullah J
- Procedural context: Applications under s 64 (and s 65) of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”)
- Applicants: Zipmex Company Limited; Zipmex Pte Ltd; Zipmex Asia Pte Ltd; Zipmex Australia Pty Ltd; PT Zipmex Exchange Indonesia
- Legal areas: Insolvency Law — Moratoria; Insolvency Law — Cross-border insolvency
- Statutes referenced: Insolvency, Restructuring and Dissolution Act 2018; Companies Act (Cap 50, 2006 Rev Ed) (including the precursor moratoria regime); Companies Act 1967 (as referenced in metadata)
- Key statutory provisions (as discussed): ss 63, 64, 65, 246 of the IRDA; ss 211B (precursor) of the Companies Act
- Judgment length: 15 pages, 3,555 words
- Cases cited (as provided): [2020] SGHC 149; [2022] SGHC 196 (this case itself); Re IM Skaugen SE and other matters [2019] 3 SLR 979; Re Zetta Jet Pte Ltd and others (Asia Aviation Holdings Pte Ltd, intervener) [2019] 4 SLR 1343; Re Opti-Medix Ltd (in liquidation) and another matter [2016] 4 SLR 312
Summary
In Re Zipmex Co Ltd and other matters [2022] SGHC 196, the High Court granted extensions of moratoria in favour of multiple entities within the Zipmex Group, including foreign companies. The applications were brought under s 64 of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”), with s 65 being relevant to extending the moratorium protection to related group entities where they played an integral role in the proposed restructuring.
The court’s central focus in the published remarks was jurisdiction over foreign companies and the threshold requirement of a “substantial connection” to Singapore. The judge held that the concept of “centre of main interests” (COMI)—developed in Singapore primarily in the context of recognition of foreign insolvency proceedings under the UNCITRAL Model Law—could be applied consistently when assessing substantial connection for moratoria purposes. While the court was satisfied that the statutory requirements for moratoria were met, it considered that a five-month extension was not appropriate and instead granted approximately three-month extensions to enable monitoring and engagement.
What Were the Facts of This Case?
The applications were made by companies in the Zipmex Group: Zipmex Asia Pte Ltd (a Singapore-incorporated group holding company), Zipmex Pte Ltd (a Singapore subsidiary), Zipmex Company Limited (described as a Thailand entity), Zipmex Australia Pty Ltd, and PT Zipmex Exchange Indonesia. The group operated a cryptocurrency exchange platform accessible through the Zipmex App, through which customers traded cryptocurrencies.
Customers who registered with Zipmex gained access to a “trade wallet” and a “fiat wallet”. The fiat wallet received fiat currency deposits (national currencies) which could be converted into cryptocurrencies. The cryptocurrencies purchased or deposited into the “hosted wallet” were described as “On-Exchange Assets”. For certain entities (notably Zipmex Singapore, Zipmex Australia, and Zipmex Indonesia), ownership of the cryptocurrencies transferred to the relevant entity once deposited into the hosted wallet. Those assets could then be used by the entity for its own purposes, including pledging, re-pledging, or hypothecating.
The judgment also described a further layer of group-level asset management through a service called “ZipUp+”. Under ZipUp+, customers could deposit crypto assets from their hosted wallets into a separate “Z wallet”, subject to separate terms and conditions. Once transferred, the assets ceased to be governed by the terms of the specific entity and were instead governed by the ZipUp+ terms. The assets in the Z wallet were held by Zipmex Asia (incorporated in Singapore) at a group level in an aggregated “hot wallet” (i.e., connected online rather than kept offline). This arrangement enabled the Zipmex Group to deploy cryptocurrencies, including to third parties such as crypto exchanges or crypto asset management companies.
As for fiat currencies, the judgment stated that they were held on a custodial basis for customers. These fiat funds were held in omnibus accounts maintained with banks, created and maintained in the names of the subsidiary entities. The judgment further noted that all crypto assets—whether in the Z wallets hosted by various entities or in the hosted wallets—were held in a wallet hosted by Zipmex Asia. For Zipmex Thailand, the judgment indicated that crypto assets were held on a custodial basis, rather than with ownership transferred to the Thailand entity.
What Were the Key Legal Issues?
The first key issue was whether the statutory requirements for granting moratoria under s 64 of the IRDA were satisfied for each applicant, and whether the moratoria should be extended for a particular duration. The judge approached this by reference to the structure of the moratoria regime: the court does not decide the merits of claims or order payment, but must assess whether there is sufficient indication that the proposed compromise or arrangement has a reasonable prospect of working and being acceptable to the general run of creditors.
The second key issue—given the cross-border nature of the Zipmex Group—was whether the High Court had jurisdiction over the foreign companies for the purposes of granting moratoria. This turned on whether the foreign entities had a “substantial connection” to Singapore. The court also had to consider how to apply the COMI concept in this moratoria context, and whether COMI should be treated differently depending on whether the proceeding was one of recognition under the Model Law or a restructuring moratorium under the IRDA.
A related issue was the appropriate scope and duration of the moratoria extensions. Even where the court found the requirements met, it retained discretion over the length of the extension, and it needed to balance creditor protection, the need for breathing space, and the court’s ability to monitor progress and engagement with stakeholders.
How Did the Court Analyse the Issues?
The judge began by situating the moratoria regime in its legislative purpose. The precursor moratoria provision (s 211B of the Companies Act) was introduced to give companies in difficulty “breathing space” to put together a rescue plan, avoiding a scramble among creditors to liquidate the company. The trade-off for the moratorium is that proceedings against the company are suspended, but the company must show support from creditors and an undertaking or promise to put forward a rescue plan or proposal (as reflected in s 64(4) of the IRDA).
In explaining the approach, the judge relied on guidance from Re IM Skaugen SE and other matters [2019] 3 SLR 979 (“IM Skaugen”), which interpreted the precursor regime and therefore remained relevant to s 64 of the IRDA. The court’s task in s 64 proceedings is not to determine the merits of individual claims or to order payment. Instead, it requires a broad assessment of whether there is a reasonable prospect that the intended compromise or arrangement will work and be acceptable to the general run of creditors. The court does not take a vote at this stage, but it considers the quality of creditor support, particularly from significant or crucial creditors.
On the facts, the judge stated that he was satisfied that the requirements under ss 64 and 65 were met by the respective applicants. In particular, there was sufficient indication that the proposed scheme would work and be acceptable to the general run of creditors. However, the judge did not accept that a five-month extension was appropriate. He instead granted an approximately three-month extension for each application, explaining that this would allow the court to monitor progress and engagement. The court also indicated that further extensions could be granted if matters were in order, thereby preserving flexibility while ensuring oversight.
Turning to jurisdiction over foreign companies, the judge emphasised that ss 64 and 65 operate to protect not only the applicant company but also certain related companies where they play a necessary and integral role in the proposed compromise or arrangement. The court also noted that, as empowered by ss 64(5)(b) and 65(4)(b), the moratoria operate against acts of a person in Singapore or within the jurisdiction of the court, regardless of whether the act occurs in Singapore or elsewhere. This statutory reach is important in cross-border insolvency settings, where creditors and counterparties may act outside Singapore but still fall within the court’s jurisdictional framework.
The substantial connection requirement for foreign companies was then analysed. The judge referred to s 246(1) of the IRDA, which provides that an unregistered company (a foreign company) may be wound up only if it has a substantial connection. Substantial connection may be established by various factors, including that Singapore is the centre of main interests of the company (s 246(3)). Although COMI had been considered in Singapore primarily in the context of recognition of foreign proceedings under the UNCITRAL Model Law (implemented via s 252(1) of the IRDA), the judge held that there was no reason to differentiate between COMI’s use in different contexts.
In particular, the judge relied on prior Singapore decisions discussing COMI. In Re Zetta Jet Pte Ltd and others (Asia Aviation Holdings Pte Ltd, intervener) [2019] 4 SLR 1343 (“Re Zetta Jet”), the court had made observations about how COMI should be determined, including that factors should be objectively ascertainable by potential creditors and that the weight given to particular factors should be considered in light of how creditors would view them. The judge also referenced Re Opti-Medix Ltd (in liquidation) and another matter [2016] 4 SLR 312, where the court had considered whether a common law notion of COMI could be introduced for recognition outside the Model Law.
Crucially, the judge concluded that Parliament’s adoption of the COMI concept did not indicate an intention to treat it differently across contexts. COMI, he reasoned, is a useful concept for identifying the jurisdiction with the closest and most tangible or impactful connection to a company. Therefore, the same COMI framework could inform the substantial connection analysis for moratoria jurisdiction. This approach provides coherence across Singapore’s insolvency jurisprudence and supports predictability for practitioners dealing with cross-border restructurings.
Although the extract provided is truncated and does not reproduce the remainder of the COMI analysis in full, the published remarks make clear that the court considered substantial connection to be sufficiently established for the applicants. The judge’s separate submissions on substantial connection were treated as important because the applicants included foreign entities, and the court’s authority to grant moratoria depended on satisfying the substantial connection threshold.
What Was the Outcome?
The High Court granted extensions of the moratoria operating in favour of the Zipmex Group applicants. While the court was satisfied that the statutory requirements under ss 64 and 65 were met, it adjusted the duration of the moratoria: instead of granting a five-month extension, the judge allowed an approximately three-month extension for each application.
The practical effect was to provide the Zipmex entities with a limited period of procedural protection from creditor enforcement actions, enabling time for engagement and progress towards a proposed restructuring scheme. The court also signalled that further extensions could be granted if the restructuring process remained on track, subject to continued judicial monitoring.
Why Does This Case Matter?
Re Zipmex Co Ltd and other matters is significant for practitioners because it clarifies how Singapore courts approach jurisdiction over foreign companies in moratoria proceedings. The decision reinforces that the substantial connection requirement is not merely a formal hurdle; it is a substantive jurisdictional gateway that must be satisfied for the court to extend restructuring protection to foreign entities.
More importantly, the judgment provides a principled explanation for applying COMI consistently across insolvency contexts. By holding that there is no reason to differentiate between COMI’s use in recognition under the UNCITRAL Model Law and COMI’s use in moratoria jurisdiction under the IRDA, the court promotes doctrinal coherence. This reduces uncertainty for creditors, debtors, and advisers when assessing whether Singapore is the appropriate forum for cross-border restructuring measures.
The case also illustrates the court’s practical balancing of creditor interests and restructuring needs. Even where the court accepts that a scheme may work and be broadly acceptable, it may calibrate the duration of moratoria to ensure oversight and engagement. For insolvency practitioners, this signals that applications should be supported not only by evidence of creditor support and a plausible restructuring path, but also by a realistic timetable that aligns with the court’s monitoring function.
Legislation Referenced
- Insolvency, Restructuring and Dissolution Act 2018 (IRDA), including ss 63, 64, 65, 246
- Companies Act (Cap 50, 2006 Rev Ed), including s 211B (precursor moratoria regime)
- Companies Act 1967 (as referenced in the case metadata)
- UNCITRAL Model Law (referenced indirectly through Singapore’s implementation and discussion of COMI)
Cases Cited
- Re IM Skaugen SE and other matters [2019] 3 SLR 979
- Re Zetta Jet Pte Ltd and others (Asia Aviation Holdings Pte Ltd, intervener) [2019] 4 SLR 1343
- Re Opti-Medix Ltd (in liquidation) and another matter [2016] 4 SLR 312
- [2020] SGHC 149 (as listed in metadata)
- Re Zipmex Co Ltd and other matters [2022] SGHC 196
Source Documents
This article analyses [2022] SGHC 196 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.