Liquidator remuneration in insolvency proceedings often raises difficult questions; especially in large corporate collapses where the work is extensive and the stakes are high. Courts must balance fair compensation with creditor protection, but approaches to fee assessment have varied across jurisdictions, leading to uncertainty and dispute.

Does a claim for a balance of sale of shares, originally owed by one of the two entities that amalgamated to become the debtor, constitute an equity claim pursuant to section 2(1) of the Bankruptcy and Insolvency Act1 (hereafter the BIA) in the context of a proposal of that same debtor?

If so, what are the consequences for the Seller?

Background

Questions en litige

Est ce qu’une créance relative à un solde de prix de vente d’actions, initialement due par une des deux entités ayant fusionné pour devenir la débitrice, constitue une réclamation relative à des capitaux propres au sens de l’article 2 (1) de la Loi sur la faillite et l’insolvabilité1 (ci après la « LFI ») dans le cadre de la proposition de cette même débitrice?

Le cas échéant, quelles sont les conséquences pour le Vendeur?

Trame factuelle

Singapore’s firm trajectory towards becoming an international hub for debt restructuring received a boost with the Companies (Amendment) Act 2017 coming into force on 23 May 2017.

The Judicial Insolvency Network (JIN) conference aims to encourage communication and cooperation amongst national courts.

From 10 to 11 October, Singapore hosted the inaugural JIN conference. JIN is a network of insolvency judges from around the world whose aim is to encourage communication and cooperation amongst national courts by pulling together best practices in cross-border restructuring and insolvency to facilitate cross-court communication and cooperation.

Singapore is set to adopt the recommendations of the Committee to Strengthen Singapore as an International Centre for Debt Restructuring.

Introduction

Ask any restructuring professional about the greatest challenge in restructuring and reorganising a business group with operations in the People’s Republic of China (PRC), and he/she is likely to say that it is virtually impossible to take over control of the PRC operating subsidiaries without the co-operation of the existing PRC legal representatives.

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.

The theory of universality in insolvency, along with globalisation, has gained much traction across many jurisdictions in recent years. Briefly, the universality theory proposes that an insolvency proceeding has worldwide effect over all the assets of the insolvent company, wherever they may be.

The term “globalisation” is associated with expansion and the free movement of capital and resources. Funds raised in Country A can be invested in a variety of different countries for better returns. In times of economic expansion, it can be unfashionable to consider insolvency issues. This may explain why insolvency practitioners find themselves holding many discussions among themselves.