Hogan Lovells business restructuring and insolvency practice partners Ron Silverman, Robin Keller, and Shaun Langhorne recently joined Debtwire senior legal content specialist Richard Goldman to discuss some “game-changing” revisions to Singapore’s insolvency regime. During the discussion, the panel addresses how Singapore, in an effort to market itself as an international forum for debt restructurings, transformed its restructuring laws from a creditor-based tool premised on English insolvency statutes into a debtor-friendly system more akin to Chapter 11 of the U.S. Bankruptcy Code. The panel also breaks down some key concepts that, while common to U.S. restructurings, were completely foreign to Singapore insolvency proceedings, including automatic moratoriums against creditor self-help, postpetition DIP or rescue financing, cramdown availability, and enhanced disclosure requirements. Finally, the panel provides notable considerations that practitioners and investors should take into account when navigating this yet-to-be tested regime.
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.
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