Following an overhaul of the Singapore insolvency regime which came into force on 30 July 2020, the insolvency and restructuring framework was consolidated in the omnibus Insolvency, Restructuring and Dissolution Act 2018 (IRDA). One of the key features of the IRDA was to amend the then-existing construct of statutory avoidance actions in Singapore.

Overview of statutory avoidance provisions following IRDA

Having caught your eye with the catchy heading, don’t stop reading if you are involved in the management or directorship of any business in the Pacific.

Acquiring an insolvent corporation’s operations during a legal proceeding (rehabilitation, recovery, or debt settlement) presents numerous business opportunities. However, the holding of an insolvency auction, an integral part of the sale, may threaten these opportunities. During a sale, the insolvent corporation’s trustee (or the administrators) needs to maximize proceeds from the auction to pay creditors. Therefore, the trustee must consider offers from additional bidders before accepting a proposal.

Bankruptcy Law Reforms Committee (“BLRC”) was very clear while setting out the objectives of the new insolvency law for the country and speedy resolution/decision making in an insolvency situation was stated to be one of such foremost objectives. Fragmented laws governing an insolvency and lack of a cohesive framework governing the rights of various stakeholders during insolvency was identified as a primary reason for inefficiency of the pre-existing legal framework.

The Insolvency and Bankruptcy Code, 2016 ("the Code" & “IBC”) has been widely acclaimed as a transformative legislative framework in India, representing a significant departure from previous insolvency laws by emphasizing efficient resolution processes and the professionalization of insolvency services.

Introduction

In the dynamic and rapidly evolving global marketplace, particularly in fast-growing economies like India, there are ever-growing commercial transactions amongst entities within India as also in international transactions amongst entities within India and outside of India.

Since the inception of the Insolvency and Bankruptcy Code, 2016 (“Code“), the debt resolution regime in India has witnessed not only a paradigm shift from the conventional ‘debtor in possession’ to a progressive ‘creditor in control’ but has also undergone a significant transformation, marking a departure from its traditional labyrinthine processes to a more streamlined and effective framework.

The proposed EU Directive on harmonisation of insolvency law seeks to set minimum standards for exercising avoidance actions in insolvency proceedings in order to safeguard the insolvency estate from unlawful asset transfers before the initiation of insolvency proceedings.

In Peru, the insolvency system is administrative rather than judicial. Because the administrative authority has limited powers, preference and avoidance actions must be resolved by the Judiciary. In recent years, the use of these actions has become more frequent.

Scope of avoidance actions

The Employment (Collective Redundancies and Miscellaneous Provisions) Act 2024 has been signed into law. The Act, once commenced, will amend the existing collective redundancy regime in insolvency situations and will deliver on key Programme for Government commitments detailed in the Plan of Action – Collective Redundancies following Insolvency.

Background

This article was first published by Insol World Magazine in Q1 of 2024.

Insolvency office-holders in the UK and elsewhere frequently rely upon litigation funders to finance their legal proceedings and, accordingly, developments in the funding market are of keen interest to insolvency professionals.