(a) To what extent is this type of business 'finance' technique practised in this economy?

 

Equipment leasing is commonly practised in Singapore.

(b) If default is made what are the rights of the owner of the property to recover the leased property?

 

The rights of the owner to recover the leased property are governed by the terms of the lease. There is no statutory regulation of leases. A lease by definition does not include an option to purchase and therefore falls outside the Hire Purchase Act.

A lease of personal property will commonly provide that upon default the lessor ceases to be in possession of the property with the consent of the owner. This then gives the owner the right to obtain an order from the Court seeking damages for conversion or requiring the lessor to deliver up the equipment, if the lessor fails to allow the lessee to retake possession.

(c) Does the exercise of these rights require court process?

 

Only if the lessor fails, refuses or neglects to comply with his contractual obligations voluntarily or if the lessor is a company and is in judicial management.

(d) How effective in actual practice is the process of recovery (list any relevant impediments, such as the right of access to the place where the equipment is situated; the right to physically take the equipment away from the place; and so forth)?

 

The effectiveness of the process of recovery depends on the extent to which the lessor is prepared to cooperate with the lessee. If he fails, refuses or neglects to cooperate, judicial process is required.

(e) What effect does the commencement of insolvency proceedings in respect of the corporate debtor have on the recovery of leased property?

 

As the property in leased property does not, by definition, pass, the leased property does not form part of the assets of the debtor and is unavailable for distribution to its creditors in any insolvency proceedings. The only exception is in judicial management where the statutory prohibition outlined above extends to prohibit steps taken to repossess goods let under a chattels leasing agreement without the leave of Court or the judicial manager. The purpose of this provision is to ensure that while the judicial manager formulates and implements plans to restructure the company, he is able to ensure that all its key assets remain in place to allow the business to be sold as a going concern, if possible.

(f) Is it usual for an equipment lease to be supported by guarantees (sureties) for payment of lease charges; default penalties; and so forth?

 

This is usual in the case where there is an identity between the ownership and management of the business enterprise. In other cases, guarantees may be sought and procured from the lessor's parent company or holding companies.