Post-Covid restructuring and insolvencies further complicated by Asia Pacific’s fragmented legal regimes

A post-COVID-19 rise in restructuring and insolvencies in Asia Pacific could be complicated by the region’s fragmented restructuring and insolvency landscape. 

In the third edition of its Guide to Restructuring, Turnaround and Insolvency in Asia Pacific, the firm advises how organisations with interests in the region can best navigate the region’s restructuring and insolvency laws in a particularly challenging year.

Paul Apáthy, Global Co-head of Herbert Smith Freehills’ Restructuring, Turnaround and Insolvency practice, said the third edition of the Guide was particularly important for companies with stressed businesses or credit exposures in the region.

‘Government relief and stimulus packages gave businesses and consumers breathing space during the worst of the pandemic,’ Mr Apáthy said. ‘Many of these measures will disappear in the coming months and that will add pressure on consumers, businesses and their stakeholders, including lenders.’

Mr Apáthy said the sectors that are likely to see the most restructuring activity are those dependent on consumer spending, such as retail, travel, entertainment and hospitality. ‘We expect this rollback to increase restructurings and insolvencies across the region as economies slow and consumer spending drops further.’

‘To add to the complexity for businesses operating across the region, there is little coordination of insolvency and restructuring processes in Asia Pacific, compared to Europe or North America.’

The Guide also highlights recent reforms that have significantly altered the restructuring and insolvency landscape in the region, including Singapore’s initiative to become an Asian restructuring hub, India’s introduction and ongoing refinement of its new Insolvency and Bankruptcy Code 2016, and ongoing evolution of restructuring techniques in respect of mainland Chinese debtors.

Key recent legislative developments across the region that are detailed in the Guide include Myanmar’s Insolvency Law, Philippines’ Personal Property Security Act, and Singapore’s Insolvency Restructuring and Dissolution Act. The Guide also provides a summary of COVID-19 related insolvency and restructuring law changes in each jurisdiction up to the date of writing.

It provides an overview of the legal framework for corporate restructuring, turnaround and insolvency in 18 major jurisdictions across Asia Pacific, including: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, Myanmar, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, South Korea, Taiwan, Thailand and Vietnam.

You can request a copy of the Guide by clicking here.