June 2017
Contents
Introduction 1. Better accessibility to Singapore's corporate rescue and restructuring framework for foreign companies 2.Chapter 11 style - Rescue financing / DIP financing 3.Enhanced moratoriums with extra territorial effect 4.Increased disclosure, cram-downs and pre-packs 5. The adoption of UNCITRAL Model Law Conclusion Your contacts
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2017 Singapore Insolvency and Restructuring Reforms June 2017
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Introduction
Globalization is a hot topic these days. It should come as no surprise, then, that the challenges that come with having a global enterprise in financial distress can be complex. The panelists at the INSOL breakout session, Group next (or not): continuing challenges in the treatment of enterprise groups in insolvency, explored what happens when a global organization with businesses in multiple jurisdictions around the world tries to implement a cohesive and coordinated restructuring.
The English Court granted recognition of Chapter 11 proceedings in relation to a company that was incorporated in the UK but had its centre of main interests ("COMI") in the United States, confirming that the Directors were foreign representatives for the purpose of the Cross Border Insolvency Regulations 2006 ("the Regulations").
Singapore is set to adopt the recommendations of the Committee to Strengthen Singapore as an International Centre for Debt Restructuring.
This past weekend, Hanjin vessels commenced unloading operations on the U.S. West Coast for the first time since Hanjin filed its bankruptcy petition with the Seoul Central District Court in Korea. Vessels have also been reportedly unloading in Japanese and Canadian ports. There is an obvious overriding public interest in having the many millions of dollars worth of cargo resume moving to its various destinations.
Key points
- Automatic stays on proceedings are imposed by Article 20 of the UNCITRAL Model Law (and mirrored in s.130(2) IA 1986)
- The case reinforces the principle that automatic stays are designed to avoid the unnecessary expenditure of assets otherwise available for distribution amongst creditors
The facts
Given the current worldwide economic climate, the number of companies facing insolvency that have assets in multiple jurisdictions around the world has increased dramatically. It is not unusual in today’s global economy for a corporation to have commercial offices, production plants and/ or research facilities in many different countries. A company that is faced with the bleak picture of insolvency may be forced to make decisions on whether to seek protection under a number of different statutory structures.
The shipping industry was arguably one of the hardest hit by the downturn that spread around the world late last year. The severe shipping slump, evidenced by a 93.5 per cent fall in the Baltic Dry Index between the summer of 2008 and December 2008, inevitably led to insolvencies of shipping companies across the globe1. This article briefly considers the unique challenges that insolvency practitioners face when balancing insolvency procedures against the application of maritime law.
Summary
On 1 July 2009, UNCITRAL adopted the Practice Guide on Cross-Border Insolvency Cooperation. The Practice Guide provides a useful reference source on some practical aspects of cooperation and communication to deal with many of the conflicts and tensions between stakeholders and jurisdictions inevitable in cross-border cases. To ease these tensions, it is often essential for creditors and, importantly, the courts concerned to reach agreement about how the process will be handled.
International context
Introduction