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 case of Re Lehman Brothers Europe Ltd (In Administration)[2020] EWHC 1369 (Ch) in May 2020 highlighted the importance of ensuring that creditors or the creditors committee approve the discharge of Administrators’ liability pursuant to paragraph 98 of Schedule B1 to the Insolvency Act 1986.
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
The landmark decision in Design Studio1 introduces the US rescue financing concept of "roll-ups" to Singapore. This is the first case to consider the appropriateness of the roll-up feature in Singapore and is a pragmatic decision that is guided by a careful balance between the protection of creditors' interests and the rehabilitation of the debtor. This case also clarifies that super priority is not solely for new money financings.
The Design Studio case and the super priority regime
publication of The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020. If approved by Parliament the scheme will come into force on 4 May 2021.
Having successfully obtained a public interest winding-up order in Re PAG Management Services Limited [2015] BCC 720 which operated a business rates avoidance scheme using Members’ Voluntary Liquidations, the Secretary of State for Business, Energy and Industrial Strategy unsuccessfully tackled its successor in the Court of Appeal.
The scheme in this case (Scheme 3) was a variant upon two earlier schemes, Scheme 2 being no longer in operation following the public interest winding-up of PAG Management Services Limited.
If you are an aviation professional in the COVID-19 era, you are likely learning about, or reacquainting yourself with, the restructuring process.
Amendments to Article 9.1 of the Insolvency Law1 ("Law 149-FZ") came into effect on 24 April 2020. The amendments provide that the benefit of the insolvency filing moratorium can be waived (the "moratorium waiver"). In addition, on 21 April 2020, the Supreme Court of the Russian Federation ("Russian SC") adopted clarifications (the "Clarifications"),2 which, in particular, explain that the moratorium will apply if the debtor meets the formal criterion of being included in the list of persons covered by the moratorium ("protected debtors").
The Spanish Government has just approved relevant changes to the Spanish Insolvency Act in view of the current situation in Spain pursuant to the COVID-19 outbreak.
The new Royal Decree 16/2020, of 28 April
Before Royal Decree 16/2020, of 28 April ("RD 16/2020"), was approved, certain temporary changes had already been introduced as a matter of urgency to Spanish Act 22/2003, of 9 July (the "Spanish Insolvency Act"), by Royal Decree 8/2020, of 17 March ("RD 8/2020").