At first blush, it may seem counterintuitive for financiers to compete to provide loans to debtor companies that have just filed for protection under an insolvency or restructuring procedure, but they have been proven to do so on a large scale in US Chapter 11 cases and for a variety of reasons, whether to protect an existing loan position or taking an opportunity to garner significant, safe returns as a new lender.

The Act is a groundbreaking development in Singapore's corporate rescue laws and includes major changes to the rules governing schemes of arrangement, judicial management, and cross-border insolvency. The Act also incorporates several features of chapter 11 of the U.S. Bankruptcy Code, including super-priority rescue financing, cram-down powers, and prepackaged restructuring plans. The legislation may portend Singapore's emergence as a center for international debt restructuring.

Background

Pars Ram Brother (Singapore Company) obtained trade financing facilities from various banks, and pledged the goods financed by each bank under a pledge arrangement as security.

The Singapore Company entered into voluntary liquidation. The liquidator discovered that the Singapore Company had mixed the goods making it impossible to identify which goods were financed by which bank.

Issue

In the first judgment under Singapore’s new ‘super priority’ DIP financing regime, the Singapore High Court declined to grant priority status to funds to be advanced to the Attilan Group.

The Singapore regime is the first to import US Chapter 11-style DIP priority funding mechanisms into a jurisdiction with primarily English-law based corporate law and insolvency regimes.

The judgment discusses how Singapore provisions align with established principles under US Bankruptcy Code provisions and case law.

Key Points

• Under rule 98(2)(c) of the Singapore Bankruptcy Rules, the court shall set aside a statutory demand if the creditor holds ‘security for the debt’ claimed in the demand, and the court is satisfied that the value of such security is equivalent to or exceeds the full amount of the debt.

• This case suggests that the creditor making a statutory demand is not obliged to disclose security offered by a third party, but only by the debtor in respect of the debt.

The Facts

Business relationships and transactions are usually based on contracts, and nothing is as binding on a party as signing on the dotted line. We would expect legal obligations to follow the signee. However, there are instances where signatures can be „disguised‟ or forged. In the case of The Bank of East Asia Limited v Sudha Natrajan [2015] SGHC 328, the Court had to decide whether the signature on a contract was indeed executed by the Defendant, or a forgery as alleged by the Defendant.

CLIENT UPDATE 2016 FEBRUARY 1 © Rajah & Tann Singapore LLP Key Legislative and Regulatory Developments in Singapore for the Year 2015 This Update provides a brief summary of the key statutory and regulatory developments in Singapore for the year 2015.

In Chan Siew Lee Jannie v Australia and  New  Zealand Banking Group  Ltd  [2016] SGCA 23,  the Singapore Court of Appeal was faced with the issue of whether a statutory demand issued to a guarantor would be deemed defective and liable to be set aside if it did not include the details of a pledge given by the  principal debtor.

Financial Services Regulatory Singapore Client Alert May 2016 MAS Issues Proposed Enhancements to Resolution Regime for Financial Institutions in Singapore Background In June 2015, the Monetary Authority of Singapore ("MAS") issued a consultation paper on the Proposed Enhancements to the Resolution Regime for Financial Institutions in Singapore ("June 2015 Consultation Paper").

When goods are delivered to a professional storage operator (we will refer to them as a warehouseman) for safe keeping, they may become subject to a lien. A lien is a security right which gives the warehouseman rights over the goods that can take precedence over the rights of others, including the owner. The warehouseman is entitled to exercise the lien when he or she is left unpaid for services rendered and in so doing will gain legal control over the goods.