The Singapore Companies (Amendment) Act 2017, which came into force on 23 May 2017, introduced significant new legislative tools to rescue distressed companies and enhanced Singapore’s schemes of arrangement and judicial management processes.
The act also introduced into Singapore law the UNCITRAL Model Law on Cross-Border Insolvency, facilitating the recognition of cross-border insolvency processes in Singapore.
Creditors’ schemes of arrangement
The amendments introduced significant changes to the existing scheme of arrangement provisions. A scheme is a compromise between a company facing financial difficulties and its creditors, which gives the management of the company a respite through a court-sanctioned moratorium to restrain any debt enforcement actions.
The following new provisions adopt features of the US Bankruptcy Code, including chapter 11:
- Automatic moratorium from the date an application is made, plus the capacity for a pre-application moratorium and a moratorium in relation to related entities of the debtor company, in each case with extra-territorial effect;
- Super-priority rescue (DIP) financing;
- Cram downs; and
- Pre-packs.
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Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by emailing: Danian Zhang at danian.zhang@bakermckenzie.com, or for general enquiries contact Anand Ramaswamy at anand.ramaswamy@bakermckenzie.com
