The Singapore High Court recently issued the first-ever super-priority order for debts arising from rescue financing under Section 211E(1)(b) of the amended insolvency laws in the Companies Act. The decision shows that the court is open to adopting relatively unique deal structures, and could be a benefit for more business-centric solutions.

In Part 1, we discussed how, despite widespread usage, termination in the event of bankruptcy clauses (“ipso facto” clauses) are generally unenforceable pursuant to the bankruptcy code. In this second part, we discuss why these clauses are still prevalent in commercial transactions and the exceptions that allow for enforceability in certain situations.

Why Do Ipso Facto Clauses Remain in Most Contracts?

If ipso facto clauses are generally not enforceable, then why do practically all commercial agreements continue to include them? There are several reasons.

Practically all commercial transactions, including licenses, services agreements, and supply agreements, contain a provision that triggers termination rights, without notice, to a party whenever the other party files for bankruptcy or experiences other insolvency-related event. In Part 1 of a two-part series, we discuss how the commonly used termination-on-insolvency clauses are generally unenforceable despite their widespread use.

Standard Ipso Facto Provision

In retail bankruptcies, it is important for suppliers consigning goods to merchants to be aware of the commercial law rules governing consignments. Disputes among consignors, inventory lenders, and bankruptcy debtors have been arising frequently in retail bankruptcy cases. Disputes like these can be avoided if consignors consider the basics of commercial law rules governing consignments, particularly under the Uniform Commercial Code, and take steps to protect their rights and interests.

Many tax-exempt organizations can now change their state of organization and retain their current tax exemption.

Two key changes made to Australian insolvency law enhance restructuring efforts in Australia and could improve outcomes for US investors.

The court awarded OpCo Noteholders in excess of $320 million in Make-Whole Amount and post-petition interest, confirming that make-whole is an enforceable liquidated damage claim.

Les multiples réformes menées par le Ministre de la Justice Koen Geens se traduisent également dans les procédures d’insolvabilité. Avant la réforme annoncée de la loi sur les faillites et de la loi sur la continuité des entreprises, la loi du 1er décembre 2016 modifiant le Code judiciaire et la loi du 8 août 1997 sur les faillites, instaure un Registre Central de la Solvabilité.

Since 1 January 2017, the law explicitly provides for a general option for the National Social Security Office (“NSSO”) to recover undisputed debts by means of a writ of execution. 

This means that the NSSO can provide itself an enforceable title (a writ of execution) without having to rely on the labor court. 

The recovery through a writ of execution can be used for all contributions, penalties, interests and other amounts that would be due to the NSSO. It is, however, important that it concerns debts: 

(i) that are not fundamentally disputed;

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