Singapore has earned a budding reputation as a hub for debt restructuring and insolvency in Asia, with its transparent legal system and judicial expertise. This growth can also be attributed to enduring efforts to innovate and reform.
To enhance Singapore as a forum of choice in international restructuring and insolvency proceedings, the Rules of Court were amended with effect from 1 October 2022 to allow restructuring and insolvency matters which are international and commercial in nature to now be heard in the Singapore International Commercial Court (“SICC”).
Three significant features of such cross-border corporate insolvency and restructuring proceedings in the SICC stand out:
- Broad range of cross-border proceedings – A broad range of options are available for parties to commence SICC proceedings relating to schemes of arrangement, judicial management, winding up and/or the UNCITRAL Model Law on Cross-Border Insolvency.
- Foreign legal representation allowed – Foreign lawyers are given access (upon obtaining permission from the SICC) to appear before the SICC and submit on matters of foreign law and factual matters. This is a significant improvement from the pre-existing position, in which foreign law has to be proved as an issue of fact and can only be submitted on by Singapore lawyers.
- Potential to appoint foreign insolvency practitioners – Foreign insolvency practitioners might soon be appointed to advise and work on cases that are heard in the SICC, according to the Ministry of Law.1 If implemented, parties will no longer be limited to the pool of Singapore-licensed insolvency practitioners and will be able to concurrently appoint a foreign insolvency practitioner, especially in cases where significant work needs to be done in a foreign jurisdiction.
A timeline and welcome step
Multi-national corporations or enterprises with a growing or existing Asia Pacific presence will now find Singapore more attractive as a nodal jurisdiction to carry out cross-border restructuring or insolvency processes. The amendments recognise the modern reality that restructuring of multi-national corporations inevitably require dealings with businesses, assets, contracts and legal obligations across a cross-section of jurisdictions. The abilities to be represented by foreign lawyers and to potentially appoint non-Singaporean insolvency practitioners allow the SICC to be a “one-stop shop” for multi-national corporations conducting a restructuring exercise, affording the necessary flexibility to plan and execute such exercises in a nimble and effective manner, which is important in the modern fast-paced economic climate.
This development further enhances Singapore’s reputation at the forefront of efforts to foster cross-border cooperation in the area of restructuring and insolvency. England & Wales and Singapore have followed a similar path of seeking to encourage cross-border cooperation in the sphere – illustratively, Singapore and England & Wales have been among the relatively limited number of jurisdictions (notably also including the USA) to have adopted the UNCITRAL Model Law on Cross-Border Insolvency. While Hong Kong has not adopted the UNCITRAL Model Law on Cross-Border Insolvency Law, it continues to recognise and to provide assistance to foreign insolvency processes under the common law. Practitioners in England & Wales and Hong Kong will welcome continued developments in this direction in Singapore and particularly the moves to facilitate access to the Singaporean courts by foreign counsel and the appointment of foreign insolvency practitioners.
Koay May Yee, Managing Director from FTI Consulting, adds: “The Rules of Court amended with effect from 1 October 2022 will make Singapore an attractive forum for insolvency lawyers advising companies in emerging markets in Southeast Asia to anchor their restructuring exercises here. This option is particularly attractive for matters originating from jurisdictions where existing legal frameworks are antiquated and inadequate to deal with matters around insolvency.
Going forward, if the appointment of foreign insolvency practitioners is permitted, we will see increased competition in the insolvency space with more highly qualified international practitioners leading complex cross border engagements brought before the SICC. Weak practices will find it increasingly difficult to compete and leave this space, ultimately strengthening and improving the overall standard of the restructuring and insolvency fraternity in Singapore.”