The son of the founder of Singapore oil trader Hin Leong Trading said the company hid about US$800 million in losses racked up in futures trading, suggesting a much bigger hole in its finances than thought, according to people with knowledge of the matter. Hin Leong, one of the biggest and most secretive forces in the world of physical fuel-oil trading, filed for court protection from creditors last week after hiring law firm Rajah & Tann as advisers to talk to its lenders, the people said. The closely held company ran into financial difficulties earlier this month after some lenders pulled its credit lines amid concerns over its ability to finance its debts. The oil trader is said to owe almost US$4 billion to more than 20 banks. Its downfall shows the depth of the fallout from the slump in oil prices so far this year as a consequence of the Saudi Arabia-Russia price war and the coronavirus pandemic . The trader’s troubles have rippled through the oil trading community in Singapore, one of the world’s most important oil markets and the biggest ship fuelling hub. Asian banks from DBS to HSBC are bracing for bad loans to spike amid coronavirus Lim Chee Meng, the only son of founder Lim Oon Kuin, said the company also sold some of the million of barrels of refined products it had used as collateral to secure loans from its banks, according to the people, citing an April 17 email sent by the shipping affiliate of Hin Leong, notifying recipient parties of proposed moratorium proceedings. As a result, the company faces a significant shortfall between the oil stocks it held and the inventories pledged to its banks. That potentially means huge losses for the banks which provided the merchant with billions in loans as the collateral they thought they have as a guarantee isn’t there. The son, also known as Evan Lim, said he was unaware of the reason for losses suffered over some years and his father had instructed Hin Leong’s finance department to omit them from its financial statements, according to the people with knowledge of the email sent by Ocean Tankers Pte Ltd, signed by the son and his sister Lim Huey Ching. Neither the son nor the father could be reached for comment on Sunday. Nobody responded to calls or emails to Hin Leong or Ocean Tankers seeking comment. A spokeswoman for Rajah and Tann said the law firm is unable to comment because the matter is before the court. The trouble at Hin Leong is the latest to hit the commodity trading community in Singapore, among the largest hubs alongside Geneva, London and Houston. Over the last three years, the city state has seen the collapse of other big names in the industry: Noble Group and Agritrade, and a rogue trader raking up millions in losses. Mitsubishi to shut Singapore oil unit where rogue trader lost US$314 million Hin Leong and Ocean Tankers both filed for court protection from creditors on Friday as the former struggles to repay its debts. Both companies are solely owned by the Lim family. Hin Leong posted a positive equity of US$4.56 billion and net profit of US$78 million in the period ended October 31, according to the people, who asked not to be identified as the matter is sensitive. But Hin Leong told its creditors this month that total liabilities reached US$4.05 billion as of early April, while assets were just US$714 million, leaving a hole of at least US$3.34 billion, according to screenshots of the presentation to a group of bankers seen by Bloomberg News. The balance sheet of the company showed no equity at all as of April 9, and warned that “figures obtained from the company are subject to verification”. The latest accounts of Hin Leong Trading, for the financial year ending October 31, 2019, were audited by Deloitte & Touche LLP. The auditor did not flag any problems, according to people familiar with the matter. Press spokespeople from Deloitte’s Singapore office could not be immediately reached out of normal office hours Sunday. The company told its creditors that it only had US$141 million worth of oil products inventory, compared with the US$1.28 billion it declared in its audited statement on October 2019. Hin Leong had only US$50 million in cash as of April 2020, compared with US$461 million in October 2019. A group of about 10 lenders including HSBC, Singapore’s three largest banks, Standard Chartered and Deutsche Bank held a virtual meeting with the oil trader and its advisers on April 14. The lenders had earlier declined to comment on the matter. Oil, bribes, politicians: what happened to ‘clean’ Singapore? HSBC has the biggest exposure to Hin Leong at about US$600 million, the people said earlier last week. Singapore’s largest lender DBS Group has an exposure of about US$300 million, while its local competitors Oversea-Chinese Banking Corp and United Overseas Bank are owed at least US$100 million each, they added. Lim Oon Kuin, known to many in the industry as OK Lim, founded the Singapore oil trader in 1963. It has grown into one of Asia’s largest suppliers of ship fuel, or bunkers. Its bunkering arm, Ocean Bunkering Services was ranked the third-largest shipping fuel supplier in Singapore last year, according to the city state’s Maritime and Port Authority, while its affiliate Ocean Tankers owns a fleet of more than 100 oil tankers. The founder will be resigning from all executive roles in Hin Leong and related companies as of April 17, according to the people, citing the email. He will also step down as director and managing director of Ocean Tankers.