2023 was a monumental year for the development of Singapore case law on restructuring and insolvency.
Introduction
1. A crucial element to any scheme of arrangement is the question of how creditors are to be classed for voting purposes. In this regard, while the proper test for the classification of scheme creditors is well established, the increasing sophistication of restructuring deals have resulted in recent decisions that reveal finer aspects to the implementation of this test. This article explores the practical issues that appear to be arising with increasing frequency in relation to the composition of creditor classes.
I. Introduction
1. Since 2017, Singapore has continually revamped and enhanced its corporate debt restructuring mechanisms. One of these enhancements is the introduction of the cross-class cramdown in Singapore’s Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”).
2. The cross-class cramdown is a powerful tool which is intended to prevent minority dissentients from blocking the passage of a scheme of arrangement. It can bind entire classes of dissenting creditors, as long as at least 1 class has voted in favour of the scheme, among other requirements.
Insolvency set-off is an important quasi-security device for parties engaging in trade or other dealings with a company. It enables mutual debts owed between a party and a company to be set off against each other if the company goes into judicial management or liquidation.
The Court of Appeal has, in Foo Kian Beng v OP3 International Pte Ltd (in liquidation) [2024] SGCA 10 (OP3 International), comprehensively considered the contours of a director’s duty to consider the interest of creditors in certain circumstances (Creditor Duty). In this important decision, the apex court examined when the Creditor Duty first becomes engaged as well as the nature, scope and content of the duty.
Introduction
The players may change but the story is always the same – the debt that is due and owing arises out of documents which contain an arbitration agreement. In such a scenario, should the claimant pursue winding-up proceedings in court or commence an arbitration?
Introduction
Singapore has invested significant efforts in positioning itself as a regional restructuring hub in recent years, introducing substantial reforms and enhancements to improve the effectiveness of its debt restructuring regime. These reforms include enhanced moratorium protections, super-priority for rescue financing, “pre-packaged” schemes of arrangements, and restrictions on the operation of ipso facto clauses.
The approval of the creation of an administrative convenience class (Administrative Convenience Class) comprising low value creditors to reduce the administrative burden on restructuring entities by the General Division of the Singapore High Court (High Court) in Re Zipmex Pte Ltd and other matters [2023] SGHC 88 (Re Zipmex) is a positive step in promoting Singapore as a preferred restructuring destination, particularly for crypto restructurings.
Background