Singapore’s Ministry of Law (known locally as MinLaw) has submitted a bill to update the country’s insolvency and debt restructuring laws which would see a number of welcomed revisions to assist the development of Singapore’s recently implemented restructuring regime.
The new bill proposes various structural changes to the country’s insolvency laws: consolidating the personal and corporate insolvency and restructuring laws (currently in two separate statutes: the Bankruptcy Act and Companies Act, respectively) and then repealing the Bankruptcy Act and the provisions in the Companies Act relating to corporate insolvency and restructuring.
Of practical interest is the regulatory regime for insolvency practitioners which will see the introduction of minimum qualifications, conditions for the grant and renewal of licences, and a disciplinary framework. The regime will be administered by MinLaw’s Insolvency and Public Trustee’s Office and is anticipated to further strengthen Singapore as a hub for debt restructuring, providing “greater opportunity for companies in financial distress”. Leaning also on the principles of US Chapter 11, Singapore is set to adopt new restrictions on ipso facto clauses which allow a contract to be terminated or changed when a specified trigger event happens, such as insolvency or restructuring. The use of such clauses is currently unrestricted in Singapore and the development is seen as a positive step to allow companies to continue to operate as a going concern.
The changes are welcomed from an offshore perspective as this not only strengthens Singapore’s offering to allow offshore companies to restructure in Singapore, but also allows Singapore companies with operational or trading entities in the region to retain value while the restructuring is effected in Singapore and at the offshore level, where judicial managers and insolvency practitioners can obtain Court support.
This article has been republished from www.harneysoffshorelitigation.com