Rian Matthews and Kate Ballantine-Dykes from Baker McKenzie have published an article entitled “Common law to the rescue: bridging gaps in international and domestic restructuring and insolvency regimes” in Corporate Rescue and Insolvency.
The Singapore and Hong Kong governments are both in the process of radically overhauling their restructuring and insolvency regimes (see here and here). The article however considers how the Courts in those jurisdictions have also made efforts to modernize the regimes in those countries through developing the common law.
- The common law has long held that Courts can recognize foreign insolvencies when they take place in the jurisdiction where the debtor company is registered. The Singapore courts have now extended this, confirming that in Singapore common law the courts can also recognize foreign insolvencies commenced where the debtor company’s centre of main interest is located, even if that is different to where the company is registered (see: Re Opti-Medix Ltd (in liquidation) and another matter  SGHC 108).
- The Singapore courts have similarly extended the common law to enable interim orders in aid of foreign rehabilitation proceedings, not just foreign insolvencies (see: Re Taisoo Suk (as foreign representative of Hanjin Shipping Co Ltd)  SGHC 195). Since the above article has been published, the Singapore courts have confirmed that recognition is also possible for voluntary rehabilitation or insolvency proceedings, which is a departure from earlier English case law on this point (see: Re Gulf Pacific Shipping  SGHC 287).
- The Singapore courts have also extended the common law to address inadequacies in domestic insolvency laws. In Living the Link Pte Ltd (in creditors’ voluntary liquidation) and others v Tan Lay Tin Tina and others  SGHC 67, the Singapore High Court held that a director who made preferred payments to related entities of a company on the verge of insolvency was in breach of her fiduciary duties to protect the interests of the company’s creditors. In a significant extension of the law, the director was held personally liable for such payments. This protects creditors’ interests in situations where they may otherwise have no recourse.
First published in Corporate Rescue and Insolvency, Vol 9.6, December 2016, LexisNexis.