The English High Court has sanctioned a restructuring plan in respect of EUR 3.2 billion of bonds issued by the German real estate business, Adler Group. The main objective of the plan was to avoid Adler's imminent insolvency by facilitating access to EUR 937.5 million of new money funding and thereby providing a stable platform from which Adler Group can pursue a solvent wind-down by asset sales over time in recovered market conditions. This represents a novel use of the restructuring plan procedure, which has previously been seen exclusively as a corporate 'rescue' tool.

In Re Zipmex Pte Ltd and other matters [2023] SGHC 88, the Singapore High Court imported into the Singapore restructuring regime the US concept of an "administrative convenience class" in a scheme voting exercise. This concept allows debtors to obtain an approval from a large number of low value creditors without those creditors being involved in the voting exercise. This reduces the administrative burden on restructuring entities.

In recent years, Indonesian companies have shown both a greater willingness to use foreign restructuring processes, as well as a greater need to do so given the increasingly sophisticated financing structures and investor bases seen for Indonesian businesses. Some of the notable Chapter 15 protection cases include those involving the Duniatex Group in 2020, PT Bakrie Telecom Tbk in 2018, PT Bumi Resources Tbk in 2017, and Berau Capital Resources Pte Ltd (a Singapore SPV of PT Berau Coal Energy Tbk) in 2015.

While the timing of competing English and German insolvency applications in Re Galapagos allowed for clear determination of jurisdiction under the UK Insolvency Regulation, there remains potential uncertainty as to how similar competing applications made following 31 December 2020 will be resolved in the post-Brexit environment.

Background

In Re Tantleff, Alan [2022] SGHC 147, the Singapore High Court considered for the first time whether the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency (30 May 1997) (the "UNCITRAL Model Law") as enacted under the Insolvency, Restructuring and Dissolution Act 2018 ("IRDA") (the "Singapore Model Law") applies to real estate investment trusts ("REITs").

Lock-up agreements typically involve the company's creditors committing in advance to vote at the relevant class meeting in favour of the contemplated scheme. Lock-up agreements serve an important commercial purpose of either securing support or giving an indicator as to likely support for the scheme before the parties incur the time and expense in finalising the negotiation process of the scheme.

The automatic stay under the version of the UNCITRAL Model Law on Cross-Border Insolvency adopted by Singapore ("Singapore Model Law") is an accessible and powerful tool for protection under the Singapore restructuring regime for non-Singapore debtors facing enforcement action in Singapore. Non-Singapore debtors subject to restructuring or liquidation cases outside Singapore may obtain protection from creditor action in Singapore through the application of the Singapore Model Law, thereby facilitating the debtor's ability to restructure.

The Insolvency, Restructuring and Dissolution Act 2018 (the "IRDA") came into force on 30 July 2020. The consolidation of all personal and corporate insolvency and debt restructuring legislation into a single statute, along with other legislative changes, seeks to further strengthen Singapore's position as an international debt restructuring hub. This note highlights certain key changes effected by the IRDA that are relevant to loan market participants.

Restrictions on ipso facto clauses

In Re PT MNC Investama TBK [2020] SGHC 149, the Singapore High Court provided guidance as to what is sufficient for a foreign company to establish standing to avail itself to the Singapore restructuring regime. Specifically, the factors expressed in the "substantial connection" test under the IRDA¹ are non-exhaustive and courts will consider other factors involving "some permanence" to permit foreign companies to restructure in Singapore.

Establishing a "substantial connection"

The Insolvency, Restructuring and Dissolution Act 2018 (the "IRDA") came into force on 30 July 2020. The consolidation of all personal and corporate insolvency and debt restructuring legislation into a single statute, along with other legislative changes, seeks to further strengthen Singapore's position as an international debt restructuring hub. This note highlights the new restrictions on ipso facto provisions effected by the IRDA, which will be of particular interest to loan market participants.

Restrictions on ipso facto clauses