Singapore, Indonesia courts forge cross-border insolvency agreement to streamline debt restructurings

The supreme courts of Singapore and Indonesia have signed a memorandum of understanding (MOU) that, for the first time, gives judges in both countries a formal channel for coordinating on the same insolvency or restructuring case.

This reduces the risk of inconsistent outcomes, fragmentation of the insolvency process, poor recoveries, inefficiency and wastage of costs, said Kannan Ramesh, insolvency judge and judge of the Appellate Division of the Supreme Court of Singapore.

The MOU, signed on Mar 30 on the sidelines of a judicial workshop in Bali, goes beyond existing international frameworks by spelling out precisely how that coordination works, he added.

The agreement builds on the United Nations Commission on International Trade Law, or UNCITRAL, Model Law on Cross-Border Insolvency.

Singapore adopted this in 2017 to provide a common framework for courts dealing with debtors with assets or creditors across multiple countries.

A key pillar of this law, Justice Ramesh explained, is the obligation to communicate and cooperate in concurrent insolvency or restructuring proceedings.

The MOU “goes a step further than the Model Law by prescribing the modalities by which communication can take place”, he noted.

In particular, each court will designate a liaison to initiate and receive communications, with the language, interpretation and translation requirements also prescribed.

The liaison officer is likely to be a senior judicial officer such as a registrar or judge, with response times depending on the urgency of the matter and the stage of proceedings, Justice Ramesh said.

In practical terms, this means that when a company faces concurrent insolvency proceedings in both Singapore and Indonesia, the presiding judges will have an established pathway to communicate and work towards “a comprehensive solution that is in everyone’s interest”.

Though it would be difficult to “comprehensively list the types of businesses that would attract the application of the MOU”, he noted that it would typically apply where concurrent insolvency proceedings are opened in both countries, and where recognition, assistance and relief is sought from one jurisdiction in relation to proceedings in the other.

The business in question would likely be incorporated or headquartered, have assets or liabilities, or carry on economic activities in both nations – though it could also be connected to other jurisdictions, he added.

Besides building on the UNCITRAL Model Law on Cross-Border Insolvency, the MOU expands a regional framework endorsed by the Council of Asean Chief Justices in November 2025.

Indonesia joins Malaysia and the Philippines in establishing such bilateral arrangements with Singapore.

Said Justice Ramesh: “We are committed to deepening ties and engagement, and exploring avenues of cooperation with fellow Asean members.”

Business failures are cross-jurisdictional in nature

Indonesia-related restructurings before Singapore courts are not new.

The judge cited the restructuring of Asia Pulp & Paper Company – a Singapore holding company for around 150 subsidiaries in China, Indonesia, Mauritius and the United States – in the early 2000s as an example.

More recently, in 2025, there was the restructuring of the Pan Brothers Group, comprising companies in Indonesia and other jurisdictions.

Other cases in the last few years have also shown that the failure of a business is often cross-jurisdictional in nature.

Justice Ramesh pointed to cryptocurrency exchange FTX and its 130 affiliated global entities, whose failure in 2022 demonstrated how a collapse “can send ripples, and perhaps even cause tsunamis elsewhere”.

“The fluidity of movement and volatility of cryptocurrencies posed difficult questions of asset tracing, valuation of assets, and the location of class action proceedings,” he added.

“Without communication and cooperation, the risk of inconsistent outcomes and the fragmentation of the insolvency process, resulting in poor recoveries, inefficiency and wastage of costs, was very real.”

Closer to home, the restructuring of Indonesian flag carrier Garuda illustrated both the potential and the limitations of cross-border judicial cooperation.

When the airline’s restructuring proceedings came before the Jakarta Commercial Court, the Singapore International Commercial Court engaged in court-to-court communication with the Bankruptcy Court of the Southern District of New York in 2023 and 2024, with a view to conducting a joint hearing.

Though this hearing ultimately did not materialise, the case “illustrates the potential of communication and cooperation between courts in facilitating better outcomes”, said Justice Ramesh.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

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