Oon & Bazul’s Restructuring & Insolvency Practice contributes article to International Law Office titled “Restructuring and insolvency cases following recent amendments to Companies Act”

Home/International Law Office, Meiyen Tan, Restructuring & Insolvency/Oon & Bazul’s Restructuring & Insolvency Practice contributes article to International Law Office titled “Restructuring and insolvency cases following recent amendments to Companies Act”

Oon & Bazul’s Restructuring & Insolvency Practice contributes article to International Law Office titled “Restructuring and insolvency cases following recent amendments to Companies Act”

Published On: February 4, 20192.5 min read

Oon & Bazul’s Restructuring & Insolvency Practice contributes article to International Law Office titled “Restructuring and insolvency cases following recent amendments to Companies Act”. Introduction and link to the article below.

Introduction

The Companies Act was amended in May 2017 to introduce the following enhancements to Singapore’s debt restructuring laws:

  • Super-priority status for rescue financing was introduced in both the scheme of arrangement and judicial management regimes to grant rescue financiers priority in the collection of their The courts may, subject to certain conditions being met, order that the debt be:
    • treated as part of the costs and expenses of the winding-up;
    • given priority over all preferential debts;
    • secured by a security interest on property of the company that is not otherwise subject to any security interest, or a subordinate security interest on property of the company that is subject to an existing security interest; and/or
    • secured by a security interest on property of the company that is subject to an existing security interest of the same priority as or a higher priority than that existing security interest.
  • In relation to schemes of arrangement, the changes include:
    • the availability of an automatic stay on the filing of a stay application pending the formal hearing of the stay application;
    • the court’s ability to order worldwide in personam stays against a wide range of acts, including the enforcement of security or future proceedings against the company;
    • the extension of stays to companies related to an entity undergoing a scheme of arrangement, even when those companies are not themselves undergoing a scheme;
    • the introduction of the ability to cram down dissenting classes of creditors; and
    • the availability of pre-packaged, expedited schemes that can be implemented with prior negotiations with major creditors without needing to call for a meeting of
  • As regards judicial management, the changes include:
    • the introduction of a lower threshold that companies must meet to enter into a judicial Companies now need only demonstrate that they are ‘likely to become’ unable to pay their debts instead of ‘will be’ unable to pay their debts;
    • extending the judicial management regime to foreign companies with a substantial connection to Singapore;
    • the introduction of an amendment to approve any scheme agreed to by more than 50% in number and more than or equal to 75% in value of creditors, as opposed to only 75% in value; and
    • the introduction of a requirement for secured creditors which oppose an application to show that making a judicial management order will cause disproportionately greater prejudice to them than the prejudice caused to unsecured creditors if the judicial management order is not made.
  • As regards cross-border insolvency, the United Nations Commission on International Trade Law’s Model Law on Cross-Border Insolvency 1997 (the UNCITRAL Model Law ) was adopted to better facilitate the recognition process for foreign insolvency and rehabilitation representatives and proceedings.

The article reviews the various court decisions (both reported and unreported) that have been issued dealing with these new provisions in the past year or so since they became operative. To continue reading, click here.

Related news

All news
Go to Top