Managing Partner and Head of Dispute Resolution Bazul Ashhab and Head of Restructuring & Insolvency Meiyen Tan have been quoted in a Global Restructuring Review (GRR) article titled “Singapore Worked Out”. This is the first of a new series assessing jurisdictions around the world in respect of international insolvency and restructuring matters.
The article highlights how Singapore has spent much of the last decade establishing itself as a major hub for international dispute resolution through measures such as setting up the Singapore International Commercial Court and establishing itself as an international arbitration centre.
Singapore has now turned its focus to insolvency and restructuring and has recently introduced significant amendments to rescue distressed companies and enhance Singapore’s judicial management and scheme of arrangement processes.
One notable change is in the introduction of super-priority rescue financing for companies that loan monies to distressed companies. This rescue financing would be afforded the same priority as liquidation expenses in the event of a winding up. This places rescue financing above even preferential debts.
Such changes are attractive to hedge funds and some of Meiyen’s regular clients who have taken a real and renewed interest in Singapore as a restructuring hub. She shared how she is currently in talks with certain financial adviser clients and hedge funds to “see how we can take advantage of the new lending provisions” to ensure adequate protection for the lenders who take on the hefty risk of assisting distressed companies through the injection of funds.
Despite boasting an established practice specialising in M&A, disputes and finance, Bazul recounted how Oon & Bazul had to “break in” to the restructuring market when Meiyen recently joined the firm. He emphasised the importance of support in and from the market and in Oon & Bazul’s case, that support included the existing in-house practices.
Another notable change is the introduction of an automatic moratorium from the date an application is made plus the capacity for a pre-application moratorium and a moratorium in relation to related entities of the debtor company, in each case with extra-territorial effect. The moratoriums give distressed companies breathing space but only to the extent that the Singapore government has in personam jurisdiction over a party.
Meiyen weighed in on this stating “[The legislators] did think about whether there will be parties out there who will not abide by them, who may not care. If people start doing that it would obviously make Singapore look quite bad. So they decided to just make the moratorium applicable to parties who are subject to the Singapore courts’ in personam jurisdiction. They felt that then they can enforce it and it will have teeth.”
With the changes to Singapore’s insolvency and restructuring laws taking effect, the article is timely.
The full article can be found here and was first published online in Global Restructuring Review on 5 June 2018.