Re Zipmex Co Ltd and other matters [2024] SGHC 6

Case Details

• Citation: [2024] SGHC 6
• Court: General Division of the High Court of the Republic of Singapore
• Decision Date: 12 January 2024
• Coram: Aedit Abdullah J
• Case Number: Originating Application No 381 of 2022; Originating Application No 382 of 2022; Originating Application No 383 of 2022; Originating Application No 384 of 2022; Originating Application No 385 of 2022; HC/SUM 3867/2023; HC/SUM 3868/2023; HC/SUM 3866/2023; HC/SUM 3869/2023; HC/SUM 3870/2023
• Hearing Date(s): 5 January 2024; 11 January 2024
• Claimants / Plaintiffs: Zipmex Company Limited (Zipmex Thailand); Zipmex Pte Ltd (Zipmex Singapore); Zipmex Asia Pte Ltd (Zipmex Asia); Zipmex Australia Pty Ltd (Zipmex Australia); PT Zipmex Exchange Indonesia (Zipmex Indonesia)
• Counsel for Claimants: Daniel Chia Hsiung Wen, Tang Yuan Jonathan, and Charlene Wee Swee Ting (Prolegis LLC)
• Counsel for Non-Party (Richard Chua Fen Peng): Justin Yip Yung Keong, Lam Zhen Yu, and Cheang Hui Xuan (Withers KhattarWong LLP)
• Practice Areas: Insolvency Law; Schemes of arrangement; Extension of moratoria

Summary

The decision in Re Zipmex Co Ltd and other matters [2024] SGHC 6 addresses a critical jurisdictional boundary within the Singapore restructuring landscape: the limits of the court's power to extend a moratorium under section 64(7) of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA). The Zipmex Group, a cryptocurrency exchange operator, sought a further extension of existing moratoria despite a candid admission that there was no longer any prospect of a successful restructuring. The applicants argued that the court possessed a residual or disconnected power under s 64(7) to grant such extensions for purposes other than restructuring, such as facilitating an orderly wind-down or managing administrative transitions.

Aedit Abdullah J dismissed the applications, clarifying that the court’s power to extend a moratorium is inextricably linked to the statutory purpose of restructuring. The judgment establishes that once the prospect of a scheme of arrangement is extinguished, the "breathing space" afforded by a moratorium loses its legal substratum. The court held that granting an extension in such circumstances would be contrary to the plain wording and structure of the IRDA, the clear legislative intent behind the moratorium provisions, and established judicial authority. This decision serves as a definitive rejection of the notion that a section 64 moratorium can be used as a general-purpose stay of proceedings for companies in a terminal state of insolvency.

The doctrinal contribution of this case lies in its rigorous application of the three-stage framework for statutory interpretation. By analyzing the relationship between s 64(1) and s 64(7), the court confirmed that the latter is not a standalone power but a continuation of the former. Consequently, the jurisdictional requirement of "proposing or intending to propose" a scheme must persist throughout the life of the moratorium. The judgment also highlights the procedural rigor expected of practitioners, particularly regarding the submission of evidence and arguments after a hearing has concluded.

Ultimately, the case reinforces the principle that the Singapore insolvency regime provides distinct pathways for restructuring and liquidation. Practitioners cannot utilize the flexible tools of the restructuring framework to bypass the protections and procedures inherent in the winding-up regime. The dismissal of the Zipmex Group's applications signals that the court will not permit the moratorium to be used as a "parking zone" for companies that have reached the end of their restructuring efforts.

Timeline of Events

1. 22 July 2022: The Zipmex Group filed its initial applications for moratoria under the Insolvency, Restructuring and Dissolution Act 2018, triggering automatic interim moratoria.
2. 15 August 2022: The High Court heard the initial applications and granted the moratoria, providing the group with the necessary breathing space to formulate restructuring proposals.
3. 2 December 2022: The initial expiry date of the moratoria as ordered by the court in Re Zipmex Co Ltd and other matters [2023] 4 SLR 1100.
4. December 2022 – September 2023: The Zipmex Group applied for and received multiple extensions of the moratoria as they worked toward inter-linked schemes of arrangement.
5. 29 September 2023: The court granted leave for Zipmex Asia and Zipmex Singapore to convene meetings of their creditors to vote on the proposed schemes.
6. 22 November 2023: Scheme meetings were held for Zipmex Asia and Zipmex Singapore. While Zipmex Asia’s creditors approved its scheme, Zipmex Singapore’s creditors did not.
7. 19 December 2023: Lim Wei Xiong Marcus filed his 34th affidavit, detailing the failure of the inter-linked schemes and the lack of further restructuring prospects.
8. 4 January 2024: The Zipmex Group filed the present summonses (HC/SUM 3866/2023 to 3870/2023) seeking a further extension of the moratoria until 7 March 2024.
9. 5 January 2024: The first substantive hearing of the extension applications was conducted before Aedit Abdullah J.
10. 8 January 2024: Counsel for the applicants sent a letter to the court containing further submissions and evidence without prior leave, which the court subsequently noted as a procedural irregularity.
11. 11 January 2024: A second hearing was held to address the issues raised by the applications and the applicants' subsequent submissions.
12. 12 January 2024: Aedit Abdullah J delivered the judgment dismissing the applications for extension.

What Were the Facts of This Case?

The Zipmex Group operated a cryptocurrency exchange platform, facilitating the trading of various digital assets across multiple jurisdictions. The group comprised five primary entities: Zipmex Asia Pte Ltd (the parent company), Zipmex Pte Ltd (the Singapore operating arm), Zipmex Company Limited (the Thai arm), Zipmex Australia Pty Ltd, and PT Zipmex Exchange Indonesia. The group’s financial distress led them to seek protection under Singapore’s insolvency framework in mid-2022.

The restructuring effort centered on two inter-linked and inter-conditional schemes of arrangement involving Zipmex Asia and Zipmex Singapore. These schemes were designed to be implemented together; the failure of one would effectively nullify the other. The group had successfully navigated the initial stages of the restructuring process, obtaining several extensions of the moratoria that had been in place since July 2022. The court had previously granted leave to convene creditor meetings, which were eventually held on 22 November 2023.

The outcome of these meetings was mixed. While the creditors of Zipmex Asia voted in favor of the scheme, the creditors of Zipmex Singapore did not provide the necessary support. Because the schemes were inter-conditional, this result meant that the restructuring proposal could not proceed. In the 34th affidavit of Lim Wei Xiong Marcus, dated 19 December 2023, the group admitted that there was "no further prospect of restructuring" and that the liquidation of the constituent companies was likely to be imminent. Specifically, the group noted that they were in a "terminal state" and were looking toward a transition into a winding-up process.

Despite this admission, the Zipmex Group applied for a further extension of the moratoria until 7 March 2024. They argued that the extension was necessary for several reasons. First, they claimed it would allow for an orderly transition to liquidation. Second, they pointed to a potential sale and purchase agreement (SPA) involving Zipmex Indonesia. There was significant uncertainty regarding the scope of the phrase "its affiliates" under Indonesian law, which governed the SPA. The applicants contended that the moratorium was needed to protect the group while this legal uncertainty was resolved, as it might impact the assets available for creditors in the eventual liquidation.

The applications were opposed by a non-party, Richard Chua Fen Peng, represented by Withers KhattarWong LLP. The respondent argued that the court’s power to grant or extend a moratorium was strictly contingent on the existence of a viable restructuring proposal. Since the applicants had admitted that no such proposal remained, the respondent contended that the court lacked the statutory jurisdiction to grant the requested extension. The applicants, in response, attempted to argue that s 64(7) of the IRDA provided a broader, more general power to extend moratoria than the initial power granted under s 64(1).

The procedural history was further complicated by the applicants' conduct after the initial hearing on 5 January 2024. On 8 January 2024, while judgment was reserved, the applicants' counsel submitted a letter containing additional arguments and evidence regarding the Indonesian law issues. This was done without seeking the court's leave, prompting a sharp rebuke from Aedit Abdullah J in the final judgment regarding the proper conduct of counsel in such matters.

What Were the Key Legal Issues?

The central legal issue was whether the court has the power to grant an extension of a moratorium under s 64(7) of the IRDA in circumstances where there is no further prospect of a restructuring. This required the court to determine if the jurisdictional requirements for an initial moratorium under s 64(1) must continue to be met for an extension under s 64(7).

The court had to address the following sub-issues:

• Statutory Interpretation of Section 64: Whether s 64(7) is a standalone provision or if it is substantively linked to the requirements of s 64(1), which requires a company to be "proposing or intending to propose" a scheme of arrangement.
• Legislative Purpose: Whether the "breathing space" intended by Parliament for restructuring can be extended to cover companies that have already failed in their restructuring attempts and are heading toward liquidation.
• Applicability of Judicial Management Analogies: Whether the principles governing the discharge of judicial management orders—where a court may refuse to discharge an order if it still serves a purpose—could be applied by analogy to the extension of a moratorium.
• The Role of "Orderly Wind-down": Whether the desire for an orderly transition to liquidation is a valid ground for the exercise of the court's power under s 64 of the IRDA.

This issue was particularly significant because the wording of s 64(7) is relatively general, stating that the court may "extend the period" of a moratorium "for such period as the Court thinks fit." The applicants sought to exploit this generality to argue for a broader "residual" power that could be exercised even after the primary restructuring purpose had failed.

How Did the Court Analyse the Issues?

The court’s analysis began with a rigorous application of the three-stage framework for statutory interpretation as set out in Tan Cheng Bock v Attorney-General [2017] 2 SLR 850. Aedit Abdullah J emphasized that the court must first ascertain the possible interpretations of the provision, then determine the legislative purpose, and finally choose the interpretation that best promotes that purpose.

Textual and Structural Analysis

The court examined the relationship between s 64(1) and s 64(7) of the IRDA. Section 64(1) provides the gateway for a moratorium, applicable where a company "proposes, or intends to propose, a compromise or an arrangement." Section 64(7) then allows the court to "extend the period" of a moratorium. The applicants argued that because s 64(7) does not explicitly repeat the "proposes or intends to propose" requirement, the power to extend is "disconnected" from the initial power. The court rejected this, stating at [23]:

"In my view, s 64(7) is not a standalone provision. It is an ancillary power to s 64(1). The power to extend a moratorium under s 64(7) is necessarily predicated on the existence of a moratorium that was validly granted under s 64(1) in the first place."

The court noted that the structure of s 64 implies a continuous requirement. If the underlying basis for the moratorium (the proposal of a scheme) disappears, there is no longer a "period" that can be meaningfully extended in accordance with the statute's internal logic. The court further observed that s 64(8) requires the court to have regard to the same factors in an extension application as it does in an initial application, reinforcing the link between the two subsections.

Legislative Purpose

The court turned to the legislative history, specifically the second reading of the Companies (Amendment) Bill 2017. The Senior Minister of State for Finance, Ms Indranee Rajah SC, described the moratorium as a tool to give a company "breathing room to put forward the restructuring proposal." The court concluded that the "breathing room" is not an end in itself but a means to facilitate a specific outcome: a scheme of arrangement. At [28], the court held:

"The legislative purpose of the moratorium is to facilitate restructuring. It is not to provide a general shield for companies in financial distress, regardless of whether they are actually attempting to restructure."

Granting an extension when restructuring is admittedly impossible would subvert this purpose. It would allow companies to evade the standard insolvency regime (liquidation) without the justification of a potential rescue.

Distinguishing Judicial Management

The applicants attempted to draw an analogy with judicial management, citing Re CNA Group Ltd [2019] SGHC 78. In that case, the court noted that a judicial management order might not be discharged if it still served one of the statutory purposes, even if the primary purpose had failed. Aedit Abdullah J distinguished this, noting that judicial management has a different statutory structure. Under s 96(4) of the IRDA, a judicial manager must apply for discharge if the purpose "cannot be achieved," but the court retains discretion. In contrast, s 64 is a debtor-in-possession regime where the moratorium is a temporary stay to facilitate a specific creditor-voted outcome. Once that outcome is impossible, the stay has no further statutory function.

Review of Earlier Authorities

The court looked at Re Aaquaverse Pte Ltd and other matters [2023] SGHC 29 and Re Lemarc Agromond Pte Ltd [2023] SGHC 236. In Aaquaverse, the court had dismissed a moratorium application because the company’s proposal was too vague and lacked creditor support. In Lemarc Agromond, Hri Kumar Nair J dismissed an application where there was no evidence of a viable restructuring plan. Aedit Abdullah J found that the present case was even clearer: while those cases involved unlikely restructurings, the Zipmex Group had admitted that restructuring was impossible. If the court cannot grant a moratorium where restructuring is unlikely, it certainly cannot extend one where restructuring is impossible.

What Was the Outcome?

The High Court dismissed all five summonses for the extension of the moratoria. The court found that it lacked the power under s 64(7) of the IRDA to extend a moratorium when the applicant admits there is no further prospect of restructuring. The operative conclusion was stated at [3]:

"I am of the view that granting an extension of moratoria where there is no further prospect of restructuring would be contrary to: (a) the plain wording and structure of the statutory framework under s 64 of the IRDA; (b) the legislative purpose underlying the moratorium; and (c) existing authority. As a result, the applications are dismissed."

The court also addressed the specific arguments regarding the Indonesian SPA and the "orderly wind-down." Aedit Abdullah J held that these were not valid grounds for a s 64 extension. If the group required protection during a liquidation process, they should seek such protection within the winding-up framework, not through the restructuring moratorium. The court noted that the Zipmex Group was already in a "terminal state" and that the proper course of action was to proceed to liquidation without further delay.

Regarding costs, the judgment does not record a specific costs order against the applicants in favor of the non-party objector, Richard Chua Fen Peng. As the applications were made by the Zipmex Group in the context of their own restructuring proceedings, and the respondent was a non-party who intervened to oppose the extension, the court did not apply the standard "costs follow the event" rule typically seen in inter partes litigation. However, the dismissal of the applications meant the Zipmex Group bore the costs of their own failed applications.

The court also formally rejected the further submissions and evidence sent by counsel on 8 January 2024, noting that they were submitted without leave and did not alter the fundamental legal conclusion that the court lacked the power to grant the extension.

Why Does This Case Matter?

Re Zipmex Co Ltd is a landmark decision for Singapore’s insolvency law because it defines the "outer limits" of the section 64 moratorium. For years, practitioners have debated whether the moratorium could be used flexibly to manage the "twilight zone" between a failed restructuring and the commencement of liquidation. This judgment provides a clear "No."

The case matters for several reasons:

1. Jurisdictional Clarity: It establishes that the "proposing or intending to propose" requirement in s 64(1) is a continuous jurisdictional requirement. It is not merely a "gate" that, once passed, allows the company to remain under the court's protection indefinitely. If the intention or the proposal fails, the jurisdiction to maintain the moratorium evaporates.
2. Prevention of "Moratorium Creep": The court identified a risk that companies might use the moratorium to delay the inevitable, potentially to the detriment of creditors. By insisting that the moratorium be tied to restructuring, the court ensures that the IRDA is not used to create a "shadow liquidation" where the protections of the winding-up regime (such as the oversight of a liquidator and the statutory priorities) are absent.
3. Statutory Integrity: The judgment reinforces the distinction between different parts of the IRDA. Restructuring (Part 5) and Winding Up (Part 8) are distinct regimes with different purposes and safeguards. Practitioners cannot "mix and match" provisions to suit a client's administrative convenience.
4. Practitioner Conduct: The court’s comments on post-hearing submissions serve as a stern reminder of the procedural discipline required in the High Court. It clarifies that the reservation of judgment is not an invitation for further advocacy or the late introduction of evidence.

In the broader context of Singapore’s ambition to be a global restructuring hub, this decision demonstrates that the Singapore courts will apply the law with commercial sense but also with strict adherence to statutory boundaries. While the court is supportive of restructuring, it will not allow the system to be abused by companies that have no viable path forward. This provides certainty to creditors, who can be assured that a moratorium will not be used to keep them at bay once the prospect of a deal is gone.

Practice Pointers

• Continuous Viability: Practitioners must be prepared to demonstrate the ongoing viability of a restructuring proposal at every extension application. A mere "hope" of restructuring is insufficient; there must be a concrete plan or a clear intention to propose one.
• Admissions of Failure: Once a company admits that restructuring is no longer possible, counsel should immediately pivot to the appropriate insolvency regime (e.g., voluntary winding up or judicial management) rather than seeking to prolong a section 64 moratorium.
• Post-Hearing Submissions: As emphasized in para [35], counsel must not send further submissions or evidence after a hearing has concluded and judgment is reserved without first obtaining express leave from the court. Such conduct is a breach of procedural propriety.
• Inter-linked Schemes: When dealing with inter-linked schemes, practitioners should have a "Plan B" in place. If one scheme fails, the legal basis for the entire group's moratorium may be at risk.
• Evidence of Support: Following Re IM Skaugen SE [2019] 3 SLR 979 and Re All Measure Technology (S) Pte Ltd [2023] SGHC 148, applications for extension must be supported by evidence of creditor support and progress in negotiations.
• Orderly Wind-down: If an "orderly wind-down" is the goal, practitioners should look to the powers of a liquidator or a judicial manager, rather than attempting to use a moratorium as an administrative tool.

Subsequent Treatment

As a relatively recent decision (January 2024), Re Zipmex Co Ltd stands as the leading authority on the limits of s 64(7) IRDA. It follows the restrictive trend set by Re Aaquaverse Pte Ltd and Re Lemarc Agromond Pte Ltd, signaling a judicial intolerance for "zombie" moratoria. It is expected to be cited in any future application where a company seeks to extend a moratorium in the face of creditor opposition or failing restructuring prospects.

Legislation Referenced

• Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed), ss 64, 64(1), 64(2), 64(4), 64(7), 64(8), 71(1), 89(1), 95, 96(4), 112(1)
• Companies Act 1967 (2020 Rev Ed), s 210(1)

Cases Cited

• Applied: Tan Cheng Bock v Attorney-General [2017] 2 SLR 850
• Referred to: Re All Measure Technology (S) Pte Ltd [2023] SGHC 148
• Referred to: Re CNA Group Ltd [2019] SGHC 78
• Referred to: Re Aaquaverse Pte Ltd and other matters [2023] SGHC 29
• Referred to: Re Lemarc Agromond Pte Ltd [2023] SGHC 236
• Referred to: Re IM Skaugen SE and other matters [2019] 3 SLR 979
• Referred to: Re Zipmex Co Ltd and other matters [2023] 4 SLR 1100

Source Documents

• Original judgment PDF: Download (PDF, hosted on Legal Wires CDN)
• Official eLitigation record: View on elitigation.sg