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
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
A worldwide moratorium is one of the most important protections and tools available to a debtor in the Singapore cross-border restructuring regime. A recent Singapore High Court case, Re: Zetta Jet Pte Ltd and Others (Asia Aviation Holdings Pte Ltd, intervener) [2019] SGHC 53 ("Re Zetta Jet (2)"), highlighted some important considerations relating to such a worldwide moratorium, in particular dealing with potential conflicts between different jurisdictions.
Singapore's Cross-border Restructuring Regime
After months of public consultations and revision, the Singapore parliament passed the Companies (Amendment) Bill (the "Bill") on 10 March 2017 amending the Singapore Companies Act (the "Companies Act"). The Bill contains, among others, significant and novel changes to Singapore's insolvency laws. This is no doubt a giant step towards positioning Singapore as Asia Pacific's Debt Restructuring Hub with cross-border restructuring capabilities.
Introduction - The Bill
Earlier this year the Committee to Strengthen Singapore as an International Centre for Debt Restructuring (the "Committee") published, and the Singapore Ministry of Law accepted, recommendations aimed at enhancing Singapore's position as a `lead centre' for international debt restructuring. Is Singapore now well-positioned to become Asia Pacific's debt restructuring hub?
Background
The judgment of Snowden J. in the adjournment of the convening hearing relating to a scheme of arrangement (the “Scheme”) proposed by Indah Kiat International Finance Company B.V. (“Indah Kiat”) emphasises some important points that must be borne in mind by debtors, investors and advisers when preparing for a scheme, such as the importance of allowing sufficient time for preparation of all relevant supporting evidence and documentation, and allowing for a realistic notice period for creditors.
On 30 October 2014, the English High Court sanctioned the second scheme of arrangement for the APCOA group (the “Scheme”). APCOA has been one of the hottest names in the restructuring market in 2014. First, it broke new ground in relation to an “amend and extend” scheme in early 2014 when it established sufficient connection to England off the back of a change in governing law. Second, the Scheme was aggressively opposed and its sanction by the High Court was appealed to the Court of Appeal (although ultimately the appeal was withdrawn).
On 4 February 2014, our client, Zlomrex International Finance S.A. (“ZIF”), completed the restructuring of its approximately €118 million senior secured high yield notes due 2014 (the “Existing High Yield Bonds”). ZIF, a company incorporated in France, is a financing vehicle for the Cognor group, one of the largest suppliers (by volume) of scrap metal, the second largest seller of semi‑finished steel products and the fifth largest seller (by volume) of finished steel products in Poland.
The English law scheme of arrangement (or “scheme”) has re-emerged as a favoured tool of choice for those engaged in complex financial restructurings, in particular where a consensual solution may not be capable of implementation. This bulletin focuses on the key terms of the most high profile recent schemes, including those of WIND Hellas, La Seda, European Directories and Cattles, and identifies current hot topics and market trends.
Background