The Singapore Law Gazette

Annotated Guide to the Singapore Insolvency Legislation

Corporate Insolvency

by Harold Foo and Beverly Wee

On 1 October 2018, the Singapore Parliament passed the long-anticipated Insolvency, Restructuring and Dissolution Act 2018 (the IRDA) which came into force on 30 July 2020. Building on the 2017 amendments to the Companies Act, the IRDA implements the recommendations proposed by the Insolvency Law Review Committee¹https://www.mlaw.gov.sg/files/news/public-consultations/2013/10/ILRC%20Report%20Executive%20Summary.pdf and the Committee to Strengthen Singapore as an International Centre for Debt Restructuring.²https://www.mlaw.gov.sg/news/public-consultations/public-consultation-on-the-report-of-the-committee-to-strengthen/ Some of the IRDA’s noteworthy features include restrictions on ipso facto clauses, out-of-court judicial management and a new wrongful trading provision.

The Annotated Guide is published by the Singapore Academy of Law and was recently released in the first half of 2023. As this book is authored by the persons³Mr Harold Foo, Deputy Director (Policy Advisory Division) and Counsel for Parliamentary Affairs at the Ministry of Law, Singapore and member of the Singapore Global Restructuring Initiative Advisory Board, and Ms Beverly Wee, Director (Licensing & Regulation of Insolvency Practitioners Division) at the Ministry of Law, Singapore. who worked on drafting the IRDA (together with its 48 supporting pieces of subsidiary legislation), it certainly offers an authoritative and comprehensive account of the extensive reforms that corporate insolvency legislation in Singapore has undergone especially in the past five years.

The foreword to the Annotated Guide was written by the Honourable Justice Kannan Ramesh who chairs the advisory board of the Singapore Global Restructuring Initiative and is a member of the international Judicial Insolvency Network. Incidentally when I was pupil, as my then boss, Justice Ramesh taught me that a good textbook on the subject matter in question should be one’s first port-of-call for research. Undoubtedly, this book is one such valuable resource when it comes to corporate insolvency law in Singapore.

This book provides detailed commentary of the various provisions of the IRDA in a concise manner that is easy to follow. There are also references to case law, comparable legislation, and law reform recommendations. Important landmark cases such as Re Zetta Jet Pte Ltd [2018] 4 SLR 801 and SK Engineering & Construction Co Ltd v Conchubar Aromatics Ltd and another appeal [2017] SGCA 51 have been digested and commented upon. The book is certainly a perspicacious repository that busy practitioners would certainly find useful in their practice and for citation in written submissions or legal opinions.

Personally, for me, I found the references to US case law extremely helpful, especially since the 2017 reforms saw the engrafting of US Chapter 11 elements onto our existing corporate insolvency provisions. This is particularly the case for super priority rescue financing and cross-class cram down, the latter of which has not been tested before the Singapore courts.

What is also impressive is the references to unreported Singapore Court decisions such as the High Court decision in Standard Chartered Bank v Ryobi Kiso (S) Pte Ltd in February 2020 on interim distributions made by judicial managers. And the book also mentions the use of ballot forms adapted from the US in the case involving Hoe Leong Corporation Ltd’s prepackaged scheme of arrangement. The book is replete with examples which demonstrate the unparalleled subject matter expertise of the authors.

Singapore has one of the most modern insolvency legislations in Asia because it has adopted the Model Law to provide cross-border assistance involving foreign office holders, which has simplified inbound recognition of foreign proceedings. In terms of outbound recognition, the Annotated Guide impressively surveys the Singapore proceedings that have been recognised in various jurisdictions around the world. I would say that the chapter on cross-border insolvency is my favourite in book. It explains the key concepts in an understandable manner, for instance the three divergent approaches to the relevant date on which the debtor’s Centre of Main Interest is ascertained.

For the more seasoned practitioners, this book will enable them to gain new insights and more in-depth analysis to formulate plausible arguments on novel issues. One small critique about the book is that it may not approach some of the provisions from a practical vantage point. For instance, the section on related company moratoriums could have given some examples of the situations which warrant such an application being made. These could possibly have been gleaned from some of the Singapore Exchange announcements mentioned in the book involving the public listed companies that made such applications.

The book certainly takes stock of the remarkable progress that Singapore has made as a restructuring jurisdiction. Even if I do not agree with some of the observations set out in the Annotated Guide (albeit a small minority), these nevertheless offer excellent food for thought. In fact, debate can lead to refinement of the IRDA that will strengthen Singapore insolvency framework even further. Already, there are discussions of undertaking a root-and-branch reform of the judicial management mechanism.⁴https://www.mlaw.gov.sg/news/speeches/opening-remarks-by-second-minister-for-law-edwin-tong-at-sicc-insol-seminar/

For lawyers who are less familiar with this area of law, the Annotated Guide is an authoritative and succinct work which summarises the new developments and enables them to keep up to date in an effortless way. As insolvency law is fast-moving and complex, the developments especially as encapsulated in the IRDA can be overwhelming and confusing to the uninitiated. It is useful to have this book as a comforting go-to reference by one’s side.

The changes to Singapore’s insolvency and debt restructuring regime have garnered much interest in the international restructuring world. This book is, therefore, strongly recommended as compulsory reading for all Singapore insolvency practitioners as well as those from other jurisdictions who are interested in the development of corporate insolvency law in Singapore.

More information on the book can be found here https://store.lawnet.com/annotated-guide-to-the-singapore-insolvency-legislation.html and I certainly forward to a companion volume that covers personal insolvency law.