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 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.

This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

A. Overview

In Denka Advantech Pte Ltd v Seraya Energy Pte Ltd [2020] SGCA 119, the Singapore Court of Appeal (“SGCA”) had the opportunity to consider the applicable law with regard to penalty and liquidated damages (“LD”) clauses.

This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

Impact of COVID-19 on corporate failures and directors’ conduct

Given the uncertainties surrounding the COVID-19 pandemic, it is anticipated that the number of formal insolvencies in Singapore will trend upwards across numerous sectors as companies see a decline in their financial position.

This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

The coronavirus pandemic has left companies increasingly concerned about the possibility of winding-up as a result of a failure to pay debts. In a situation where a party’s disputed debt is subject to an arbitration clause, the debtor may wish to seek a stay or dismissal of any winding-up applications commenced against it before the court in favour of arbitration.

The impact of COVID-19 is being felt at all levels of the economy and will work its way through bankruptcy courts for years to come. In these early days, many creditors who are themselves suffering are providing assistance to troubled companies. Suppliers and commercial landlords are agreeing to various forms of relief, including modified credit terms and rent relief to allow customers to bridge this period of unprecedented disruption. While these corporate good Samaritans are providing immediate aid they may be subjecting themselves to the risk of future losses.

The economic fallout from the COVID-19 pandemic will leave in its wake a significant increase in commercial chapter 11 filings. Many of these cases will feature extensive litigation involving breach of contract claims, business interruption insurance disputes, and common law causes of action based on novel interpretations of long-standing legal doctrines such as force majeure.

Last week, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law, implementing broad relief for individuals and businesses affected by COVID-19. One of the sections of the CARES Act receiving less attention is a temporary amendment to the Bankruptcy Code to provide streamlined reorganization procedures for businesses with debt of less than $7.5 million.

As the nation hunkers down to combat the novel coronavirus (COVID-19), bankruptcy courts throughout the country have moved quickly to implement procedures to preserve access to the courts while limiting in-person interaction during the crisis. Each court’s specific COVID-19 procedures are different, but they largely prohibit in-person hearings, recognize the need for flexibility and adjournments for non-emergent matters whenever possible, and encourage the creative use of technology to allow as many matters to go forward as scheduled, including evidentiary hearings.

Social distancing. Elbow bumps. Flatten the curve. These are the new phrases and behaviors we have learned to avoid exposure to the novel coronavirus (COVID-19). This epic struggle forces us to reexamine and reevaluate our daily habits, lifestyles and customs as we work collectively to minimize the harm to our families, friends and neighbors throughout the United States.