Bill Ricquier Joint Managing Director, Singapore
Singapore Legal Update - The Insolvency, Restructuring and Dissolution Act: An Overview
The Insolvency, Restructuring and Dissolution Act 2018, (Act No.40 of 2018, the “Act”) , which came into force on 30 July, marks, for now at least, the final stage in what has been a far-reaching overhaul of Singapore’s insolvency and debt restructuring regime.
This process had started in 2015 with some amendments to the Bankruptcy Act (Cap 20). Then, in 2017, significant amendments were made to the Companies Act (Cap 50), in respect of both judicial management orders and schemes of arrangement. In particular, aspects of the “Chapter 11” procedure of the US Bankruptcy Code were imported into a system that has historically always looked to English company and insolvency law for inspiration - if that is the right word - and provisions were enacted to deal with various aspects of cross-border insolvency.
Now the Act, a massive affair of 527 sections, draws everything together. There is nothing inherently wrong in having individual insolvency - bankruptcy - dealt with in one statutory regime, and corporate insolvency dealt with under another. There are differences and there are similarities between the various sets of procedures. But it was necessary to consult the Bankruptcy Act in order to answer quite fundamental questions in relation to corporate insolvency and the case for consolidation was not seriously arguable. Now, the Bankruptcy Act will be repealed in its entirety, and those provisions in the Companies Act dealing with insolvency will also disappear. Parts 4 to 12 (sections 61 to 272) of the Act deal with corporate insolvency, and Parts 13 to 21 (sections 273 to 437) deal with bankruptcy. Thus, separate provisions now exist enabling the court to make orders restoring the position to what it would have been had the company, or the individual, as the case may be, not entered into a transaction at an undervalue or given an unfair preference to a creditor, following an application by a judicial manager or liquidator of the company (sections 224 to 227) or by the Official Assignee (sections 361 to 365) respectively.
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