Singapore as International Debt Restructuring Center: Aspiration and Challenges

NUS Law Working Paper No. 2021/004

EW Barker Centre for Law & Business Working Paper 21/02

35 Pages Posted: 23 Feb 2021

See all articles by Meng Seng Wee

Meng Seng Wee

National University of Singapore (NUS) - Faculty of Law; National University of Singapore (NUS) - Centre for Law & Business

Hans Tjio

National University of Singapore (NUS) - Faculty of Law

Date Written: February 22, 2021

Abstract

According to some economists, the deglobalization of the world has commenced. While that is true of trade and of ideas, it may not reflect the experience of existing companies undergoing restructuring which have in a sense been locked into a previous matrix where its assets and stakeholders were widely dispersed throughout the globe. This has created anomalies in the handling of worldwide insolvency cases which comes up against both protectionism, including judicial competition for such cases leading to less universalism in some situations, as well as the realignment of interests between the various corporate constituencies due to Covid-19, which may have further strengthened the hands of shareholders at the expense of other stakeholders as companies are kept afloat. In Singapore the government decided to develop Singapore into an international center for debt restructuring as part of its strategy to export its services and for this purpose embarked on an ambitious project to reform both its domestic and crossborder insolvency laws. The hybrid scheme was created by injecting some US bankruptcy law elements into the ‘English’ scheme of arrangement. The UNCITRAL Model Law on Cross-border Insolvency, in the form of the Third Sch of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA 2018), was also adopted. Providing a forum for distressed companies in the region to restructure their debts without having to travel to London or New York is a positive development for Singapore and the region. The hybrid scheme is a path-breaking innovation so challenges to its design and operation are unavoidable. But its structure is flexible enough to allow for judicial creativity to fill gaps and to prevent its abuse. The courts face less challenges in interpreting the Third Sch, and has achieved some success in fostering cooperation and communication in cross-border insolvency matters between courts, but the domination of family companies, fragmentation of credit and weak legal institutions in the region may be more difficult challenges to Singapore’s aspiration to serve as the regional restructuring hub.

Keywords: forum shopping; international debt restructuring center; scheme of arrangement; hybrid scheme; UNCITRAL Model Law on Cross-Border Insolvency; Insolvency, Restructuring and Dissolution Act 2018; Chapter 11

Suggested Citation

Wee, Meng Seng and Tjio, Hans, Singapore as International Debt Restructuring Center: Aspiration and Challenges (February 22, 2021). NUS Law Working Paper No. 2021/004, EW Barker Centre for Law & Business Working Paper 21/02, Available at SSRN: https://ssrn.com/abstract=3790235 or http://dx.doi.org/10.2139/ssrn.3790235

Meng Seng Wee (Contact Author)

National University of Singapore (NUS) - Faculty of Law ( email )

469G Bukit Timah Road
Eu Tong Sen Building
Singapore, 259776
Singapore

National University of Singapore (NUS) - Centre for Law & Business ( email )

Eu Tong Sen Building
469G Bukit Timah Road
259776
Singapore

Hans Tjio

National University of Singapore (NUS) - Faculty of Law ( email )

469G Bukit Timah Road
Eu Tong Sen Building
Singapore, 259776
Singapore

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
44
Abstract Views
215
PlumX Metrics