Changes proposed to laws to boost S’pore as a debt restructuring hub

SINGAPORE — The Ministry of Law (MinLaw) is calling for public feedback on proposed changes to corporate insolvency laws in the Republic’s first phase of legislative reforms that seek to bolster its position as an international centre for debt restructuring.

The launch of public consultation yesterday came after MinLaw, in June 2014, broadly accepted recommendations by the Insolvency Law Review Committee (ILRC) to update Singapore’s corporate insolvency and bankruptcy laws. In July this year, the ministry also took on suggestions by the Committee to Strengthen Singapore as an International Centre for Debt Restructuring (Restructuring Committee) on ways to enhance the Republic’s attractiveness as a venue to conduct international debt restructuring.

“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,” said the ministry yesterday.

Key proposals to the Companies Act under the first phase include introducing a new set of provisions to enhance protection for both creditors and debtors during a restructuring, as well as to allow companies to apply for a judicial management order more easily.

MinLaw also proposed reforms to facilitate cross-border insolvencies, which are becoming increasingly common due to globalisation. Suggestions include adopting the United Nations Commission on International Trade Law Model Law on Cross-Border Insolvency and abolishing the general ring-fencing rule in the winding up of foreign companies.

“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,” said MinLaw.

The proposals come amid a surge in corporate defaults and insolvencies worldwide and in Singapore. S&P Global Ratings said earlier this month that global corporate bond defaults had risen to 132 cases this year, on track to become the highest since the global financial crisis in 2009. In Singapore, non-payments by Trikomsel Oke late last year and Pacific Andes Resources Development early this year marked the first defaults since 2009. Former stock market darling Swiber Holdings defaulted in August and is now under judicial management.

Mr Peter Greaves, restructuring leader at PricewaterhouseCoopers Singapore, said MinLaw’s public consultation, which runs for six weeks until Dec 2, is timely given the current economic slowdown.

“This move would be welcome at any time but is particularly timely bearing in mind the economic slowdown and the headwinds faced by certain sectors key to the regional economy … The importance of having a trusted and fit-for-purpose restructuring regime is not limited to when there is a need to deal with the casualties of economic slowdown. It also provides confidence to capital markets and therefore can give investors confidence at the front end, supporting liquidity in times when it is most needed,” he said.

“Singapore already enjoys recognition as an advanced jurisdiction for restructuring but these proposals look to take things to the next level.”

More amendments will be introduced by MinLaw and the Ministry of Finance in 2017. Public consultations on the other reforms will be launched in due course.