Singapore’s judicial management regime under review
Singapore is looking to overhaul the judicial management regime to ensure that it is not used as a precursor to winding up.
Singapore authorities are looking to overhaul the judicial management regime to ensure that it is not used as a precursor to winding up, Second Minister for Law Edwin Tong said on Thursday (Sep 22).
Officials will undertake a root-and-branch study to review, among other things, the types of applicants suitable for judicial management, such as which are the viable companies with reasonable prospects for rehabilitation.
The study will also look at tailoring the judicial manager’s expertise and domain knowledge to specific debtors, especially where the debtor does business in a specialised industry, said Tong, who was speaking at a debt restructuring conference organised by the Singapore International Commercial Court (SICC) and Insol International.
The judicial management regime is a temporary, court-supervised procedure intended as an alternative to liquidation under appropriate circumstances.
Under the regime, a company that is unable or likely to be unable to pay its debts is managed by a judicial manager. The manager’s mandate is to ensue the company’s survival, and/or its approval into a scheme of arrangement, and/or to obtain a more advantageous reliasaiton of its assets, as opposed to winding up.
Some in the legal fraternity had commented that Singapore’s insolvency laws in their early days were pro-creditor, but have gradually shifted towards a friendlier regime for corporate rescue and debt restructuring.
Still, Tong noted: “That there were some recent judicial management cases which, with the benefit of hindsight, might have been more appropriately resolved with one or more of the other mechanisms available.”
Tong also revealed on Thursday that the SICC rules have recently been amended to allow the court to hear cross-border restructuring and insolvency matters, a move that will grow the pie for the restructuring sector in Singapore.
These changes, which will take effect on Oct 1, will also allow foreign lawyers to make submissions before the court on matters of foreign law, and factual matters related to the proceedings.
Lawyers representing clients in certain insolvency cases before the SICC will also be able to enter into conditional fee agreements with their clients, whereby the lawyer receives payment only in specified circumstances.
Singapore’s law ministry is also studying possible refinements to the licensing regime for insolvency practitioners.
This includes the potential for parties to appoint foreign insolvency practitioners with the necessary qualifications, and for them to advise on cases with significant foreign elements that are heard in the SICC.
Both Tong and Insol International president Scott Atkins, who delivered the keynote speech at the conference, pointed to the influx of restructuring matters arising in the digital assets space.
Singapore is well-positioned to be the restructuring jurisdiction of choice, especially for crypto platforms with their increasingly big presence in Asia, Tong said.
As it is, Singapore has seen a number of crypto insolvency filings, such as that from Zipmex, Hodlnaut, and Vauld.
Developments in the crypto space also bring new asset tracing considerations for the insolvency and restructuring industry, Atkins pointed out.
Atkins also highlighted the commercialisation of outerspace as an opportunity for restructuring practitioners. The commercial space sector is characterised by speculative, “high risk, high return” activity, and could soon give rise to a growth in insolvency filings, he said.
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