The Singapore Companies Act (Amendment) Act 2017 (the ”Act”) significantly overhauls Singapore’s corporate rescue and restructuring framework. In doing so, Singapore has adopted a number of key features from Chapter 11 of the US Bankruptcy Code.  This client alert highlights the main amendments of the Act that corporate debtors, lenders and distressed investors should be aware of.  In particular the Act now provides: 

1. better accessibility to Singapore’s corporate rescue and restructuring framework for foreign companies;

2. US Chapter 11 style rescue/DIP financing;

3. enhanced moratoriums with extra territorial effect;

4. increased disclosure, cram-downs and prepacks; and

5. for the adoption of UNCITRAL Model Law. 

There is no doubt that the introduction of this Act greatly improves the legal framework for debt restructurings in Singapore. We envisage that this Act will put Singapore firmly on the map as a key centre for international debt restructurings providing debtors, lenders, alternative capital providers and distressed investors access to internationally recognised and highly familiar restructuring tools and techniques.  The amendments discussed in this client alert came into effect on 23 May 2017.  Read our alert, Singapore Insolvency and Restructuring Reforms

 

The Singapore parliament recently passed a bill bringing in U.S. Chapter 11-inspired changes to its debt-restructuring framework, including provisions allowing (i) courts to approve financing with priority ahead of existing senior secured facilities; (ii) courts to approve a scheme even if there are dissenting creditor classes; and (iii) international assistance proceedings.

These provisions borrow heavily from the existing provisions in the U.S. Bankruptcy Code.

In light of these changes and the impact on future restructurings, we hosted a webinar on the current and coming use of U.S. Chapter 11 and Chapter 15 proceedings in Asian restructurings.

Some of the topics discussed included:

  • Why Asian debtors might look to a Chapter 11 solution over other procedures such as Schemes of Arrangements;
  • How the equivalent provisions in the U.S. Bankruptcy Code are applied and the key concepts parties will need to be familiar with; and
  • The likely need for U.S. counsel to provide expert testimony in Singapore proceedings regarding the application and interpretation of the new U.S.-based provisions.

Click here to view the webinar.

Across Europe, increased regulation, governmental reforms, higher capital requirements and new accounting standards on valuing non-performing loans (“NPLs”) continue to drive sales of non-core loan assets, including NPLs. That background, coupled with the fact that many investors across Europe have raised capital in order to acquire loan portfolios which now needs to be deployed, is likely to drive further transactions (as well as those in new markets and in relation to more complex asset classes).

The last half of 2016 saw considerable activity in Southern Europe in particular which is likely to continue in 2017 and spread to other jurisdictions in Europe. Equally, the rising trend in NPLs in South-East Asia indicates that deleveraging is likely to become more prevalent there as well in the short to medium term.

Our cross-group team has taken an in depth look at the market, brought together in a report on loan portfolio transactions and their related financings. The report highlights potential structuring and execution techniques and explains key initial considerations for potential investors in a number of key jurisdictions.  Click here for our Client note on loan portfolio transactions or alternatively click here to go to our interactive microsite where you can view country-specific analysis for the jurisdictions covered in our report.

Hogan Lovells’ U.S. Business Restructuring and Insolvency Practice head Chris Donoho and partner Ron Silverman, along with Jefferies’ Restructuring and Recapitalization Group co-head Richard Morgner, recently joined Debtwire legal analyst Richard Goldman to discuss current issues concerning cross-border restructurings.

During the discussion, the panel addressed the factors that prompt foreign-based companies to avail themselves of the U.S. Bankruptcy Code in lieu of local insolvency proceedings, the hurdles that such companies must overcome to secure a U.S. court’s administration of their Chapter 11 cases and pitfalls that foreign-based companies may encounter in the U.S.

The panel also reflected on some recent cross-border cases, including Abengoa, Hanjin Shipping, and Baha Mar.

Click here to listen to the podcast.

Over the past several years, the international financial community has witnessed a significant increase in cross-border restructurings of Chinese companies. These restructurings have involved large enterprises with billions of dollars of revenues and indebtedness. The increase in cross-border financings, and therefore restructurings, is tied to the huge debts that Chinese companies, banks and municipalities have been accumulating since the financial crisis of 2008-2009. As central banks have held interest rates at record lows and bought up government debt to stabilize the financial system, investors have increasingly turned to corporate debt issued in emerging markets as a source of higher returns. Chinese companies have capitalized on this appetite for foreign investment and have borrowed $377bn from 2010 to 2014, according to the Bank for International Settlements.

A new wave of foreign investment seems just over the horizon. A regulatory shift was promulgated by the People’s Republic of China’s National Development and Reform Commission (NDRC) circular on administration and filing of foreign debt, which came into effect on 14 September 2015. The NDRC rule is just the most recent in a series of changes that China’s regime has gone through over the last two years that facilitate cross-border Chinese financing and investment.

Continue Reading Restructuring foreign investments in Chinese companies

Cross-border insolvency – introductory paragraph:    The decision in a recent Singapore case may be the missing part of the puzzle for cross-border recognition cases.   The Singapore High Court granted recognition of insolvency proceedings commenced in Tokyo, notwithstanding that the companies in question were incorporated in the British Virgin Islands (“BVI”).  In doing so, the court relied upon a common law application of COMI principles to grant recognition, and arguably filled a gap by finding that there is a basis for courts to recognise insolvency office holders appointed in a jurisdiction other than the place of incorporation.  Continue reading

 

 

What if anything is different?
This article by Joe Bannister previously appeared in Oil & Gas Financial Journal on 16 May 2016, click here to go the original article.
NO ONE with any interest in or knowledge of the oil and gas industry can deny that the present market conditions are anything other than challenging. However, oil price volatility and the problems it creates at the pumps, on the rigs, and in the markets is nothing new. Dependent upon one’s age and perspective, the present turmoil is merely another example of the sort of disruption and havoc played on corporate and personal budgets by the 1970 energy crisis and its aftermath. From the mid-1980s to September 2003, the inflation adjusted price of a barrel of crude oil was generally less than US$25 per barrel.  Continue reading

 

It has long been considered that lenders under a syndicated facility retain a right to seek to recover their portion of a loan directly following a payment default, typically by seeking the winding up of obligors. This is based on the several nature of the rights of finance parties which appears in clause 2 of the standard LMA terms.

However, a recent first instance decision of the Hong Kong court in Charmway Hong Kong Investment Limited and others v Fortunesea (Cayman) Ltd and others (unreported) found that a syndicated facility based on LMA standard terms creates an aggregate loan, rather than individual loans due to the lenders.  Continue reading