Wong Chee Chien writes a case update on when an admiralty claim trumps insolvency.

More often than not, a creditor with an admiralty claim would take steps to arrest a ship or vessel of the debtor, for the purposes of selling it so that the proceeds of sale will be held as pre-judgment security for the creditor.

However, if the debtor subsequently goes into liquidation, what happens to the proceeds of sale from the arrested vessel? Should the proceeds be paid to the creditor, or should they be distributed to all unsecured creditors pari passu? These issues were dealt with by the High Court in Dan Bunkering (Singapore) Pte Ltd v The Owners of the Ship or Vessel “PDZ Mewah” & Anor (see grounds of judgment dated 9 August 2021).

Although this decision deals with several issues, this case update focuses on the question of whether the creditor’s admiralty claim trumps the insolvency regime of pari passu distribution among unsecured creditors. Continue reading →