S210(1) of the Companies Act allows the Court to order a meeting between a company and its creditors to consider compromises or arrangements. In Re Sembawang Engineers and Constructors Pte Ltd [2015] SGHC 20, the Singapore High Court granted an application by Sembawang Engineers and Constructors Pte Ltd (the “Company”) for a s210(1) order. The applicant Company was successfully represented by Patrick Ang, Low Poh Ling and Chew Xiang from Rajah & Tann Singapore LLP.

A scheme of arrangement is an important avenue for a company under financial stress to compromise debts owed to specified categories of creditors. In broad terms, there are four steps to a scheme. The first step is to determine which creditors are to be covered under the scheme, categorize them, and to seek leave from the High Court to convene a meeting of each category of creditors. The second step is to hold and pass the appropriate resolutions at the meeting(s) of creditors. The third step is to obtain the sanction of the High Court of the scheme.

On 11 May 2015, the Bankruptcy (Amendment) Bill 2015 (the “Bill”) was tabled in Parliament for first reading. Essentially, the Bill seeks to amend the Bankruptcy Act to create a more rehabilitative regime for bankrupts, ensure better utilisation of public resources and encourage creditors to exercise financial prudence when extending credit.

In a judgment handed down on 9 June 2015, the High Court of Singapore has for the first time approved a litigation funding arrangement for the benefit of a company in liquidation.

Summary

The key points arising from the judgment are:

The liquidator of a company has an obligation to find out what led to the company’s failure, and take steps to maximise recovery for the company’s creditors. He is usually a stranger to the company’s business, and starts off at a disadvantage, having no prior knowledge of the company’s affairs, and usually incomplete and unsatisfactory records. He also has to deal with previous directors and officers of the company who are often uncooperative and may themselves be complicit in the company’s demise.

On 7 November 2014, OW Bunker A/S (“OW”), a global supplier and trader of marine fuel, filed for bankruptcy in Denmark. Further bankruptcies of OW subsidiaries and affiliates swiftly followed, including the bankruptcy of certain U.S. and Singapore-based OW entities.

Dispute Resolution Singapore Client Alert July 2015 Singapore High Court determines proprietary interests of customers of insolvent brokerage firm, MF Global Singapore Pte Ltd In the latest instalment arising out of the insolvency of MF Global, the Singapore High Court had to decide whether certain customers of the insolvent brokerage firm had any proprietary interests in the assets of the firm, and whether these assets were held on trust for these customers.

Introduction

On 14 July 2015, the Singapore Parliament passed the Bankruptcy Amendment Bill, which seeks to establish certain reforms in Singapore’s bankruptcy regime.

Senior Minister of State for Law Indranee Rajah said in Parliament that the changes address the striking of a balance between the need to hold bankrupts accountable and allowing them to have the opportunity to make a fresh start in their financial affairs after a reasonable period of time.

In this Update, we highlight key aspects of these reforms, which include:

In the recent landmark decision of Re Vanguard Energy Pte Ltd [2015] SGHC 156, the Singapore High Court confirmed that litigation funding may, in the context of insolvency and under the appropriate circumstances, be permitted in Singapore.

Re Vanguard Energy Pte Ltd [2015] SGHC 156