Singapore – home of failure?
As a financial hub, F1 night race location, long-haul stopover, historic, expensive, friendly and innovative city state, Singapore has used its scarce resources wisely since independence in 1965. A new twist now emerges following the passage of the “Omnibus Bill” in October 2018 that has become the Insolvency, Restructuring and Dissolution Act 2018. The new twist is Singapore as a restructuring hub – an attempt, perhaps, to challenge the global supremacy of London?
The Insolvency, Restructuring and Dissolution Act 2018 performs a similar function to the UK’s Insolvency Act 1986 by bringing separate regimes for corporate and individual insolvency into one Act (Ho and Thng (2018). It bears other similarities to the 33 year-old UK provision by:
- Mandating licensing of Insolvency Practitioners;
- Allowing “out of court” applications for “Judicial Management” (equivalent to Administration) and
- Introducing a new “wrongful trading” provision.
The Act also echoes Singapore’s British legal heritage by preserving:
- Validity of corporate charges on assets provided that they are registered within 30 days (21 days in the UK);
- Preferential status for wages creditors subject to a maximum of S$7,500 – that’s about £4,300 (a miserly £800 maximum in the UK);
- Floating charge avoidance if the charge was registered within 12 months of the commencement of insolvency and 2 years “cooling off period” if the charge-holder is an “associate”, and
- Transactions at undervalue and “preferences” taking place 3 years and 1 year, respectively, before the appointment of a Judicial Manager (that’s 2 years and 6 months in the UK).
Pick n’ mix
What Singapore has done is to look around the world at insolvency systems -they could well have read my blog in July 2018 – (Pond, 2018) to find the most efficient systems compatible with Singapore regulation, infrastructure and mores. The new Act has clear echoes of the legacy of British influence, updated by UK experience since 1986. There are also nods to Canada, the USA and to countries such as Sweden and France that prioritise payment of wages in insolvency.
Whether this consolidation of law is merely house-keeping or it represents an invitation for global companies to domicile in Singapore to ensure an easier restructuring only time will tell.
Keith Pond, (2018) Where in the world has the best business failure regime? Available at: https://www.libf.ac.uk/news-and-insights/insights/detail/2018/01/11/Insolvency-Business-Failures
Kevin Ho and Angela Thng, (2018) Restructuring and insolvency in Singapore: overview, available at: https://uk.practicallaw.thomsonreuters.com/w-010-9476?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1
The Insolvency, Restructuring and Dissolution Act 2018 can be accessed at https://sso.agc.gov.sg/Acts-Supp/40-2018/Published/20181107?DocDate=20181107.
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