Major law changes intended to make Singapore the region’s pre-eminent restructuring and insolvency hub have now come into effect.
On 22 May 2017, the Singapore Ministry of Finance issued a notice that sections 22 to 34, 40, 41, 43, 45, 49, 50, 53(3) and (6) and 54 (the Relevant Sections) of the Companies (Amendment) Act 2017 (the Amendment Act) would come into operation on 23 May 2017.
The Amendment Act was passed by the Singapore Parliament on 10 March 2017, and received presidential assent on 29 March 2017. It included a number of provisions reforming aspects of Singapore’s corporate laws, including major reforms to Singapore’s restructuring and insolvency regime, aimed at facilitating Singapore’s move to become an international debt restructuring hub.
The Relevant Sections that have now come into force include these major restructuring and insolvency reforms:
- the new ‘supercharged’ schemes of arrangement. This major reform significantly upgrades the scheme of arrangement procedure by adding:
- an enhanced moratorium, which can have ‘worldwide’ effect and can be extended to subsidiaries and parents of the scheme entity;
- a cross-class cram down mechanic;
- super priority DIP funding;
- a pre-pack process for schemes; and
- a detailed proof process;
- easier access to judicial management, and super priority funding within judicial management;
- an extension of jurisdiction for judicial management, schemes of arrangement and winding up to foreign companies that have a ‘substantial connection’ to Singapore; and
- adoption of the UNCITRAL Model Law on Cross-Border Insolvency in Singapore.
These amendments have been discussed in depth in a number of Herbert Smith Freehills’ earlier articles.1
The implementation of these reforms is a major development for cross-border restructurings in the Asia Pacific region. It will have significant implications for debtors, creditors and investors who are increasingly engaged in complex cross-border restructurings in the region.
- Singapore unveils major debt restructuring law reforms; Singapore enacts key restructuring law reforms.