Singapore is set to adopt the recommendations of the Committee to Strengthen Singapore as an International Centre for Debt Restructuring.
In 2013, Singapore’s Insolvency Law Review Committee made recommendations to update the country’s insolvency laws and noted that the demand for debt-restructuring services in Asia was growing. The Committee to Strengthen Singapore as an International Centre for Debt Restructuring—co-chaired by Ms. Indranee Rajah (Senior Minister of State, Ministry of Law and Ministry of Finance) and Judicial Commissioner Kannan Ramesh, and comprised of leading insolvency practitioners—was set up to consider how Singapore could meet that demand.
On 20 April 2016, the Committee released its Report of the Committee and, following a public consultation between 20 April and 31 May 2016, the Singapore government announced that it had accepted the Committee’s recommendations.
We look at three of the main recommendations below.
1. Enhancing the Legal Framework for Restructuring
The Committee suggested creating bespoke rules and procedures for restructuring. Notably, the Committee focused largely on cross-border insolvencies. It recommended stipulating a clear non-exhaustive list of circumstances under which Singapore courts can assume jurisdiction over
- restructurings of foreign debtors;
- promoting the adoption of the UNCITRAL Model Law on Cross-Border Insolvency and other bilateral and multilateral agreements and protocols that would increase communication and cooperation with foreign courts; and
- allowing automatic moratoriums and moratoriums with in personam worldwide effect.
The Committee also recommended setting up a specialist insolvency bench and increasing the usage of alternate dispute resolution processes for insolvency and restructuring matters.
2. Creating a Restructuring-Friendly Ecosystem
The Committee recommended increasing the availability of rescue financing by, among other things, introducing provisions for super-priority liens, attracting distressed debt funds to set up their bases in Singapore, and promoting existing incentives for rescue financing. The Committee also proposed to strengthen the insolvency profession to ensure that insolvency professionals have the depth and breadth of expertise required to handle complex global restructurings.
A recent global study showed that Singapore was rated as a very effective jurisdiction for cross-border insolvency by insolvency practitioners who had direct experience in restructuring work in Singapore. However, among practitioners who had little or no direct experience in restructuring work in Singapore, the country was not as highly rated.
To close this gap in perception, the Committee recommended that Singapore-based insolvency professionals, judges, and academics increase their participation in international insolvency events and platforms and proactively communicate Singapore’s debt restructuring regime and capabilities to the wider international restructuring community.
Singapore is firmly set on a trajectory towards becoming an international hub for debt restructuring—a plan that feeds into the country’s vision for its future economy.
The Committee will be implementing the recommendations in the coming months.