Vol 15 (2018) - Issue 1

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The New Insolvency Landscape in Singapore

a. Introduction
The Singapore Companies (Amendment) Act 2017 (the 'Amendment Act'), which came into force on 23 May 2017, implemented wide-ranging changes to Singapore’s corporate rescue landscape. These amendments are part of Singapore’s push to strengthen its position as an international centre for debt restructuring. This article briefly outlines the amendments, before commenting on selected issues.

b. Outline of amendments
i. Schemes of arrangement
The scheme of arrangement is probably the closest equivalent to a debtor-in-possession restructuring process in Singapore. Generally, a scheme of arrangement needs to be approved by half in number of the creditors holding three-fourths in value of the debt. Where the creditors vote in different classes, these requirements must be met for each of such classes. Once such a scheme is approved and sanctioned by the court, it binds the dissenting creditors as well.
The amendments made to the regime for creditors’ schemes of arrangement are particularly noteworthy. The new provisions in the Singapore Companies Act (Cap 50, 2006 Rev Ed) (the 'Act') adopt various concepts from the US Chapter 11 process, such as super priority rescue financing, ‘cram-down’ provisions which allow a scheme to be approved even though the consent of certain classes of creditors have not been obtained, as well as the possibility of an expedited scheme process. The ambit of the scheme moratorium was enhanced, and may be expressed to apply to any act of any person in Singapore or within the jurisdiction of the Singapore courts, whether the act takes place in Singapore or elsewhere. A new automatic interim moratorium was introduced. Previously, the company was required to apply for an interim moratorium as part of the scheme process, before it could convene the requisite creditors’ meeting to vote on the proposed scheme. It was then up to the court whether to grant such an interim moratorium. With the amendments, an automatic interim moratorium of 30 days arises upon the filing of an application, subject to compliance with certain requirements. The moratorium may be extended by court order.