Public Consultation Open for Feedback on Proposed Changes to Singapore’s Debt Restructuring Framework

21 Oct 2016 Posted in Press releases

1. The Ministry of Law (MinLaw) today launched a public consultation to gather public feedback on proposed amendments to the Companies Act for debt restructuring. The public consultation will run for six weeks, ending on 2 December 2016.

2. MinLaw and the Ministry of Finance (MOF) plan to introduce various amendments to the Companies Act in 2017. This public consultation is specifically concerned with reforms to Singapore’s debt restructuring and corporate rescue framework. MOF will be seeking public feedback on other reforms to the Companies Act in due course.

3. The proposed amendments seek to ensure that Singapore’s corporate insolvency laws are updated to meet modern day business needs, and to enhance the debt restructuring framework for corporate rescue.

Summary of Key Changes

4. The proposed changes form the first phase of legislative amendments, and are key to enhancing Singapore’s corporate rescue and restructuring framework. Some of the key changes are:
   1. A new set of provisions to support creditor schemes of arrangements that implement debt restructuring proposals. These provisions include:
      • Enhanced moratoriums against creditor action, aimed at conferring greater protection on a debtor during a restructuring;
      • Rescue finance provisions, to support the granting of new financing, which is provided to assist the restructuring and help Singapore expand the market for rescue financing;
      • Cram-down provisions, to prevent debt restructurings from being stymied by dissident creditors, if such creditors will not be unfairly prejudiced by the restructuring; and
      • Other enhancements, such as debtor disclosure requirements to protect creditors’ interests, or pre-packaged provisions to fast-track pre-negotiated schemes.
   2. Enabling companies to apply for a judicial management order more easily. Provisions which provide for rescue financing in judicial management will also be introduced.
   3. The adoption of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency, and abolition of the general ring-fencing rule in the winding up of foreign companies¹. This will facilitate the resolution of cross-border insolvencies, which are becoming increasingly common due to globalisation

Background

5. In June 2014, MinLaw broadly accepted the recommendations of the Insolvency Law Review Committee (ILRC), which sought to holistically update Singapore’s corporate insolvency and bankruptcy laws.

6. Building on the work of the ILRC, the Committee to Strengthen Singapore as an International Centre for Debt Restructuring (Restructuring Committee) made recommendations to enhance Singapore’s attractiveness as a venue to conduct an international debt restructuring. MinLaw broadly accepted its recommendations in July 2016.

7. In view of the complexity and volume of legislative amendments required to fully implement the relevant recommendations of both the ILRC and the Restructuring Committee, MinLaw is taking a phased approach to implementation.

Invitation for feedback

8. Interested parties may view the public consultation paper online here and submit feedback in electronic or hard copy form via either of the following:

Policy Advisory Division

Ministry of Law

100 High Street

#08-02, The Treasury

Singapore 179434

E-mail: MLAW_Consultation@mlaw.gov.sg

MINISTRY OF LAW
21 OCTOBER 2016

¹ Ring-fencing will however be retained for specific financial institutions, such as banks and insurance companies.

Last updated on 21 Oct 2016