The Ministry of Law in Singapore has announced that it will introduce a bill to the Parliament next week to offer temporary relief to businesses and individuals who are unable to fulfil their contractual obligations because of the COVID- 19 pandemic.

The proposed bill includes:

Singapore’s new restrictions on ipso facto clauses are welcome news to the local restructuring community, and a strong step towards establishing it as one of the region’s premier restructuring hubs. But how will these restrictions affect innocent counterparties and existing commercial contracts, ask partner Guan Feng Chen and associate Jonathan Tang at Morgan Lewis Stamford?

New restrictions on ipso facto clauses

Introduction

In the recent High Court judgment in VTB Bank (Public Joint Stock Company) v Anan Group (Singapore) Pte Ltd,(1) the plaintiff successfully obtained a winding-up order on a debtor company six weeks after the service of a statutory demand for an underlying debt of $250 million.

At first blush, it may seem counterintuitive for financiers to compete to provide loans to debtor companies that have just filed for protection under an insolvency or restructuring procedure, but they have been proven to do so on a large scale in US Chapter 11 cases and for a variety of reasons, whether to protect an existing loan position or taking an opportunity to garner significant, safe returns as a new lender.

Introduction

Introduction

The much-anticipated Insolvency, Restructuring and Dissolution Bill was passed on 1 October 2018. The bill aims to ensure that Singapore's restructuring and insolvency laws remain relevant and progressive to support its position as a global restructuring hub.

In situations when financing is tight, such as during recessions, corporations face difficulty refinancing existing debt or capitalising their businesses.

When faced with such realities, distressed corporations often turn to M&A transactions as a means of generating capital and exiting from non-performing businesses. In such situations, M&A transactions typically take the form of asset sales rather than mergers or share sales.

SINGAPORE INSOLVENCY, RESTRUCTURING AND DISSOLUTION BILL PASSED 

On 1 October 2018, The Insolvency, Restructuring and Dissolution Bill was passed in Singapore. 

This will consolidate personal and corporate insolvency laws into the Insolvency, Restructuring and Dissolution Act, with the Bankruptcy Act to be repealed and the relevant corporate insolvency provisions in the Companies Act being removed. 

On 1 October 2018, the Singapore Parliament passed the Insolvency, Restructuring and Dissolution Bill (the "Bill"), an omnibus legislation which will consolidate Singapore's personal insolvency, corporate insolvency and restructuring laws, which are currently under separate legislative regimes.

The overhaul follows recent amendments to the corporate insolvency and restructuring provisions of the Singapore Companies Act, and is part of a wider effort to boost the debt restructuring ecosystem in Singapore.

Key provisions introduced by the bill

Dispute Resolution

Singapore

Newsletter

December 2018

In This Issue:

Key Legal Developments

1. Arbitration 2. Construction

3. Commercial Litigation

4. Restructuring & Insolvency

5. Reforms to Singapore's civil justice system

Upcoming Events

Key Resources

For more information, please contact:

Nandakumar Ponniya Principal +65 6434 2663 nandakumar.ponniya @bakermckenzie.com

Celeste Ang Principal +65 6434 2525 celeste.ang @bakermckenzie.com