Vinashin famous trial of SBIC Chairman

As the former deputy director of Vietnam Oil and Gas Group, transferred into the hot seat at Vinashin when the enterprise was on the brink of bankruptcy, Mr. Nguyen Ngoc Su (Chairman of SBIC Board of Members) was in a famous trial in handling foreign debt…

Chairman of the Board of Members of Vinashin (SBIC), Mr. Nguyen Ngoc Su shared with Investment Securities on unexpected situations in the meeting of creditors and the famous court on the disposal of foreign debt valued at $600 million of Vinashin.


Upon the meeting of the foreign creditors for the debt of $600 million for SBIC (formerly known as Vinashin) in Singapore started, a creditor stood and requested adjourning the meeting. If this had been true, the whole effort of SBIC and related ministries of Vietnam on debt settlement would have drifted into the sea.


This unexpected situation occurred, making the legal representatives of the law firm from the UK as SBIC’s consultant unable to talk anything, people all saw the chairman of the meeting – Mr. Nguyen Ngoc Su, Chairman of the Board of Members of SBIC.


Before restructuring, Vinashin got debts of  $4 billion, including the Government's borrowing from international bonds, foreign loans, loans from domestic banks, borrowing from shippers, supplies and equipment suppliers, etc. So far, those basic debts had been basically settled, in which the restructuring of $600 million in loans from foreign creditors had become a typical case in the UK.


Under the terms of Vinashin committed with creditors, $600 million must been paid in 2010, firstly it had to pay the principal amount of $60 million and $5 million plus for interest, but so far Vinashin only has paid interest of $5 million.


In late 2011, one of the creditors, Elliot Advisers LP sued Vinashin to the international court. After several unsuccessful negotiations, Vinashin was advised by its law firm for the last sentence: applying UK law to handle the debt.
                 Mr. Nguyen Ngoc Su, Chairman of the Board of the Member of SBIC

According to this law, Vinashin had the right to apply to the UK court asking the court to allow convening the meeting of creditors to consider and vote on the restructuring of $600 million debt. After performing the procedure and sending it to the court, as told by Mr. Su, Vinashin received court approval for the organization of the meeting of creditors. In the statement stating, "The Court authorizes Dr. Nguyen Ngoc Su, Chairman of the Board of Members of Vinashin, to preside the meeting. The meeting of creditors will be held on 10 a.m, at the meeting room of X .... Singapore".


To prepare for this important meeting, all the documents, previously approved by the Ministry of Finance, Ministry of Justice, Vinashin, etc. for months and fully filed the document case were sent to 16 creditors 16 days in prior. More carefully, Mr. Su requested his staff to send hard copies via courier, guaranteeing sending and soft copies via e-mail (certified that mails had been successfully sent by the system). 2 nights before the meeting, Mr. Su had to prepare for the meeting and he could not sleep.


The meeting took place at 10 a.m, before that time, at 9 a.m, in Singapore, it was heavily rainy, the members of the team all felt very worried, but as a good omen, before 10am, it was sunny again. Right at 10 a.m, the meeting began, in addition to the creditors, the Vietnamese party had two legal consultants, Mr. Su and a legal chief of Vinashin, representing Debt and Asset Trading Corporation (DATC). A reputable international audit firm was hired to make independent scrutinizing.


As soon as the meeting began, an unexpected event happened. A creditor stood up and requested to delay the meeting. As regulated, creditors have the right to adjourn, if there is no reason to reject, the chairman must approve. If this occurred, Vinashin would have failed in the next court in the UK because there were no commitments by the creditors sent to the court.


Facing this unexpected event, two legal representatives of Vinashin just silently sat, all people looked directly at Mr. Su. "Despite i having been very worried, I stood up and said, I noted his comments but wanted to know why," said Mr. Su. "He said there was simply not enough time to study the documents", "I said, as prescribed, we had to send documents 14 days in prior, but we sent 16 days in advance of both hard copies and email. Why did all creditors receive them but only you did not receive? Can you prove you did not actually receive those documents? If you cannot not answer, I am on behalf of the British court, claim that the meeting is still carried out normally."


"After saying that, I felt like the Vietnamese party broke down with joy, everyone felt much less worried". The creditor then sat down, the meeting continued. "I pulled the seat more highly for easy observation and I saw that creditor marked “agree” in his ballot. During the counting of votes, we were restless, anxious. All members of the delegation of Vietnam did not talk to each other, the atmosphere was very quiet. When the time nearly ended, I went into the hallway, the team in charge of counting of votes came to congratulate me, 84% of creditors agreed to the restructuring plan, meaning that other creditors had to follow. Knowing this result, not only me, but all other members of the team struggled for emotional tears. Half of an hour later, the Prime Minister called, I reported this successful outcome."


"Returning to Vietnam, we continued to prepare court documents and believed that the trial would definitely win. Attending the court taking place in London, there were me, the legal chief of Vinashin and 3 officials of the consulting firm accompanying with the litigator. I will never forget the feeling of that day, the atmosphere in the courtroom was solemn, everyone was tense.


We had to wait for a previous trial. After the chairman of the court finished declaring the reasons, the litigation lawyer stood up and briefly reported in 10 minutes. The chairman stood up and talked to everyone. He pointed out of the documents placed in more than 20 cartons and said, this was supposed to be defined in English law but there was no previous precedent, especially with foreign enterprises.


He declared: Your documents are full and in compliance with the law, so the Court will approve the proposal of Vinashin and the case will be made in accordance with the law.

"We were very pleased to announce the results of the trial back to Vietnam. This case was dealt with in nearly 3 years and ended up winning," said Mr. Su.


According to the judgment of the court, $600 million of debt of Vinashin was swapped by bonds issued by DATC, guaranteed by the Government. The duration of bonds was up to 12 years, with one full payment of all principal and interest at maturity, with interest rate of 1% per year. If compared with the interest rates and repayment periods of the previous debts of Vinashin, these conditions were much more pleasant.


During his career, Mr. Nguyen Ngoc Su was the deputy director of Vietnam Oil and Gas Group, which is known as "too much money and not thinking about anything except making money". Having been transferred to the hot seat at Vinashin with a lot of bad news and issues while the enterprise was on the brink of bankruptcy, Mr. Su was under much pressure. However, the experience as shared in his story above, may be more invaluable, more precious than money that not many entrepreneurs, business leaders have a chance to go through in life.

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