Oil trader GP Global APAC Pte Ltd has applied to the Singapore High Court for a six-month debt moratorium as its parent company seeks to restructure more than $1 billion dollars in debt, according to a company director, lawyers and a court document.
The parent, GP Global – a major global oil trader and ship fuel supplier based in the United Arab Emirates – said in July it would restructure the group’s debt by selling assets after lenders scaled back credit.
GP APAC, which has missed loan payments in recent months, joins a string of defaults among Asian oil trading companies – including Singapore’s Hin Leong Trading Pte Ltd, one of Asia’s biggest bunker fuel suppliers – in the wake of last year’s pandemic-driven crash in oil prices.
The parent company, owned by India’s Goel family, said last year it had uncovered fraud within the company and filed criminal complaints against some of its employees, while it has faced several lawsuits and ship seizures by creditors.
The Singapore trader’s restructuring strategy includes “standstill agreements” with creditors that let it sell assets without the threat of creditors independently taking action against the firm.
“The moratorium application simply seeks to give effect to the in-principle agreement and allow GP APAC breathing space to carry on with the restructuring,” said Moses Lin, a legal adviser to GP APAC and partner at the law firm Shook Lin & Bok LLP.
Daniel Tan, another GP APAC adviser from the same firm, said: “The potential for seeking a moratorium in support of the restructuring has always been an option in the event any minority creditor falls out of line, and as you can see, that has happened with a couple of minority creditors.”
GP APAC owes more than $464 million to its top 20 unsecured creditors, according to an affidavit filed by Roderick Sutton, GP APAC’s sole director. Sutton, from FTI Consulting, was appointed GP Global’s chief restructuring officer in August.
Among the unsecured creditors is Singapore-based marine fuel supplier Equatorial Marine Fuel Management Services Pte Ltd, which has more than $700,000 in claims against GP APAC, according to the affidavit.
After GP APAC defaulted on Equatorial’s payment demand, Equatorial in January obtained a court ruling allowing it to seize GP APAC’s Singapore office, according to the affidavit. That derailed GP’s plans to sell the office for S$8.5 million ($6.4 million).
In doing so, “Equatorial sought to queue-jump” by laying claim on the property “which is meant to be divided equally to all creditors,” Sutton said.
Equatorial declined to comment, citing ongoing discussions.
Equatorial’s action also prompted Singapore’s DBS Bank Ltd to withdraw credit facilities for GP APAC and demand a repayment of more than S$2.4 million, according to the document.
DBS declined to comment.
Of GP APAC’s two largest unsecured creditors, Credit Suisse (Switzerland) Ltd is owed $91 million and UBS Switzerland AG $70.4 million, and they both supported the moratorium application, according to the court document.
Credit Suisse and UBS declined to comment.
In a report to lenders in September, Sutton said financial statements based on GP Global’s management accounts through July showed the company had total liabilities of more than $1.2 billion in bank borrowings and trade payables as well as a $1 billion provision for bad debts.
Sutton said in the affidavit that “various irregular commodity trades and/or fictitious trades where there was no actual transfer of any underlying cargo” led to the company’s financial woes.
“This left the Group with significant bad debt as the trade receivables due from these ‘trades’ are unlikely to be recoverable,” he said.
He said GP Global’s unsecured liabilities were expected to be reduced to about $800 million or less.
Asked how much creditors could expect to recover, he said that if the restructuring proceeds, “We think it’s 20 to 30 cents on the dollar – and if there is a liquidation it’s zero.”