Singapore these days is getting more serious about developing international insolvency hubs in the region. The government agencies have made a few recent changes to the Singapore debt restructuring and insolvency regime and it is attracting the interests of international investors around the world.
The starting point of such insolvency law changes was under review since the year 2010. The committee has worked on several aspects of this regime to improve the entire framework for liquidation regime, insolvency proceedings, arrangement schemes, judicial management, and receivership. The team delivered its improved report in the year 2013 with several essential recommendations that also included key changes to modernize insolvency laws in Singapore. It was expected to set up a roadmap for drafting specific and detailed statutory provisions for future deals.
The process was further followed by the establishment of a core committee to improve the debt restructuring process in Singapore. It was based on the legal reforms and initiatives that can be taken to enhance prominence in Singapore so that it can become an internationally recognized debt restructuring center. The modified report was further released in the year 2016.
As per professionals providing financial restructuring services, this three-stage process provided several amendments and legislative changes in the system.
A few highlights to the latest improvements in the Singapore Debt Restructuring rules:
Stage one amendments to bankruptcy act:
The committee made two main changes to the Bankruptcy Act in the year 2015; they were:
- The institutional creditors were allowed to appoint a private trustee instead of relying on the official assignee only. This public official can administer the entire process for bankruptcy while ensuring more effective outcomes.
- The professionals also introduced a rehabilitative framework for bankrupt discharge. With these new guidelines, bankrupts can find some clear timelines and goals to become eligible for getting discharged.
Stage two amendments to company act:
The potential changes at the second stage were relevant to the improvement of the jurisdiction in the Singapore courts to deal with the debt restructuring applications. The professionals also introduced some enhanced and automatic moratoriums to support such applications. The amendments also worked on the foreign company law to ensure greater clarity to the foreign investors on company formation. Few other improvements were relevant to cross-border insolvency, pre-packs, and cram-down. These efforts are expected to make it easier for investors to open new companies in Singapore. They may also receive better financial restructuring services in the region now.
Stage three amendments to restructuring, insolvency and dissolution act
These amendments were focused on the ability of a Singapore company to get placed in judicial management without even requiring some order from the court. Another important feature of the new law was the personal liability of company officers regarding any wrongful trading. The liquidators and judicial managers were also allowed to avail funding from third parties to pursue a certain set of claims. Other than this, the committee restricted the ipso facto clauses and also introduced some regulatory guidelines for insolvency practitioners.