Singapore’s highest court has definitively held that foreign insolvency, restructuring or liquidation proceedings concerning solvent companies should be recognised in Singapore (Re Ascentra Holdings, Inc (in official liquidation) v SPGK Pte Ltd [2023] SGCA 32), overturning a first instance decision taking the contrary view.

Introduction

Restructuring and insolvency proceedings often span different jurisdictions, requiring the cooperation of the respective countries' insolvency regimes. In its role as an international hub for restructuring and insolvency, Singapore has in place a framework for the effective management of cross-border insolvency proceedings. This takes the form of the UNCITRAL Model Law on Cross-Border Insolvency, which has been enacted in Singapore in an adapted form ("SG Model Law").

Introduction                                                

From 1 November 2023, bankruptcy estates are required to be administered by Private Trustees in Bankruptcy ("PTIBs"), except for cases where the Official Assignee ("OA") considers there is public interest and consents to be appointed as the trustee in bankruptcy.

In 2018, Singapore enacted the Insolvency, Restructuring and Dissolution Act (IRDA 2018), which streamlined its debt restructuring regime by consolidating provisions previously set out in various statutes into a piece of omnibus legislation.

Among other developments, the IRDA 2018 built upon existing provisions relating to pre-packed schemes of arrangement (i.e. pre-packed schemes) and enhanced pre-packed schemes as a viable tool in Singapore’s arsenal of debt restructuring mechanisms.

1. A crucial element to any scheme of arrangement is the question of how creditors are to be classed for voting purposes. In this regard, while the proper test for the classification of scheme creditors is well established, the increasing sophistication of restructuring deals have resulted in recent decisions that reveal finer aspects to the implementation of this test. This article explores the practical issues that appear to be arising with increasing frequency in relation to the composition of creditor classes. 

I. Introduction

1. Since 2017, Singapore has continually revamped and enhanced its corporate debt restructuring mechanisms. One of these enhancements is the introduction of the cross-class cramdown in Singapore’s Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”).

2. The cross-class cramdown is a powerful tool which is intended to prevent minority dissentients from blocking the passage of a scheme of arrangement. It can bind entire classes of dissenting creditors, as long as at least 1 class has voted in favour of the scheme, among other requirements.

In FamilyMart China Holding Co Ltd (Respondent) v Ting Chuan (Cayman Islands) Holding Corporation (Appellant) (Cayman Islands) [2023] UKPC 33, the Privy Council has provided useful guidance about the interplay between an arbitration agreement and exercise of the Cayman court’s powers and discretion to wind up a company on just and equitable grounds.

The Singapore High Court has again confirmed that a winding-up application concerning a disputed debt that is subject to an arbitration agreement will be dismissed if the arbitration agreement is prima facie valid and covers the dispute. This prima facie standard of review was first formulated three years ago by the Singapore Court of Appeal in AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2020] SCGA 33.

The rules governing corporate and personal insolvency in Singapore are set out in the Insolvency, Restructuring and Dissolution Act 2018 (IRDA), which includes mechanisms to reverse transactions that unfairly deplete a company's assets prior to insolvency, thereby protecting creditors' interests by allowing the value of the company’s assets to be maximised for distribution to its creditors on insolvency.

In the twelfth edition of the Going concerns, we cover set-offs and the net result of a creditor dealing with a company in liquidation; the first cross-border pre-pack scheme filed in the Singapore International Commercial Court ("SICC") by a foreign unregistered company that has been successfully sanctioned in Singapore: Re No Va Land Investment Group Corporation [2024] SGHC(I) 17 ("No Va Land"); and UAE's new bankruptcy law that came into effect on 1 May 2024, a relatively substantial overhaul of the onshore insolvency and restructuring regime in the UAE.