Reed Smith Client Alerts

Zenrock Commodities Trading Pte Ltd is one of the latest additions to the increasing list of commodities traders in Singapore making recent headlines, with financial difficulties and malpractice allegations coming to light. The COVID-19 crisis, oil price volatility and slumping demand are acting as a catalyst, and are affecting a majority of oil majors and traders in Singapore and the region.

作者: Kyri Evagora Kohe Hasan Richard G. Swinburn Johnny Lim (Resource Law LLC), Mohamed Fadhil (Resource Law LLC)

Zenrock’s creditors, which it has been revealed are owed over US$165 million, have sought to place the company under judicial management (JM), a Singapore pre-insolvency regime where an independent manager is appointed by the court to run the affairs of a financially distressed company. Following an application by its creditors on 8 May 2020, Zenrock was placed under ‘interim’ judicial management (IJM). An application for the full-fledged JM is scheduled to be heard on 21 May 2020.

Further details of Zenrock’s IJM and imminent JM are available at

As with all distressed commodities traders, placement under IJM and then JM will trigger concerns for counterparties with open trading positions. Should counterparties continue to perform or require performance under their contracts? Can they terminate their contracts on the basis of the supervening insolvency event?

This client alert considers the meaning of a company’s placement under IJM and JM under Singapore law. It then considers the effects of insolvency on a counterparty’s right to terminate a contract, under both Singapore and English law (a common contract-governing law). This last issue is very much a hot topic in the insolvency world, and companies should watch out for legislative changes under way, as also outlined in this client alert.