Singapore also enacted legislation based on the UNCITRAL Model Law on Cross-Border Insolvency as part of the enhancements to its debt restructuring and corporate rescue framework that were introduced in 2017...IntroductionThe UNCITRAL Model Law on Cross-Border Insolvency provides a useful framework for facilitating transnational restructurings.This was demonstrated in the case of H&C...
Singapore also enacted legislation based on the UNCITRAL Model Law on Cross-Border Insolvency as part of the enhancements to its debt restructuring and corporate rescue framework that were introduced in 2017...
Introduction
The UNCITRAL Model Law on Cross-Border Insolvency provides a useful framework for facilitating transnational restructurings.
This was demonstrated in the case of H&C S Holdings Pte Ltd v Glencore International AG [2019] EWHC 1459 (Ch), which is the first reported decision from the English Courts on the recognition of Singapore insolvency proceedings under section 211B of the Singapore Companies Act (Cap. 50) (the "Companies Act") in England.
Salient Facts
Section 211B of the Companies Act is one of the provisions introduced via the Companies (Amendment) Act 2017 (No.15 of 2017), which came into force on 23 May 2017, aimed at enhancing Singapore's debt restructuring and corporate rescue framework.
On 20 February 2019, H&C S Holdings Pte Ltd (the "Company") obtained an order from the High Court of the Republic of Singapore in HC/OS 93/2019 for moratorium relief under section 211B(1) of the Companies Act (the "Section 211B Order") while the Company worked out a scheme of arrangement to be entered into with its creditors.
On 25 February 2019, the Company filed an application in the High Court of Justice Business and Property Courts of England and Wales for recognition of the Section 211B Order in England under the Cross-Border Insolvency Regulations 2006 (which adopts, with modifications, the UNCITRAL Model Law on cross-border insolvency) (the "Recognition Application"). The Recognition Application was supported, amongst others, by an expert report by Mr Patrick Ang, Managing Partner of Rajah & Tann Singapore LLP, explaining, inter alia, the background of 2017 Amendment Act and Section 211B in particular.
On 25 March 2019, the English Court granted the Recognition Application with a modification to allow the publication of an arbitral award in an arbitration between Glencore International AG and the Company and recognized the Singapore insolvency proceedings as a foreign main proceeding under the Cross-Border Insolvency Regulations 2006.
In considering whether the insolvency proceedings in Singapore should be recognized, ICC Judge Jones held, inter alia, that:
"In this case, the foreign proceedings may be described, using the terminology as understood within this jurisdiction, as a "scheme of arrangement". It is a collective judicial or administrative proceeding in a foreign state, pursuant to a law relating to insolvency … … The purpose of the scheme is to achieve an arrangement whereby creditors will accept terms which will enable the Company to continue in business whilst paying, and after having paid, a lesser overall total sum to unsecured non-preferential creditors in accordance with the terms of the scheme. Overall, the scheme, and therefore the assets and affairs of the debtor Company, is subject to control or supervision by the Singapore courts for the purposes of this arrangement.
In those circumstances, in my judgment, this evidence establishes that the insolvency proceedings which remain extant in Singapore are foreign main proceedings, the applicant is a foreign representative who may apply for recognition and the requirements of paragraphs 2 and 3 of Article 15 of The Cross-Border Insolvency Regulations are met …"
The Company's restructuring efforts are still ongoing. In
this regard, the Company recently filed an application to the High Court of the Republic of Singapore for and obtained leave to convene a meeting of its creditors to consider and, if thought fit, approve a proposed scheme of arrangement to be entered into between the Company and some of its creditors.
Brief Commentary
The grant of the Recognition Application is a landmark decision as it is the first application for recognition of Singapore insolvency proceedings under Section 211B of the Companies Act in England.
In addition, this decision answers previous uncertainty as to (i) whether the English courts would grant recognition in England of Singapore scheme proceedings that seek to compromise English law governed debts, and (ii) whether a Singapore scheme proceeding is a "foreign proceeding" for purposes of the Cross-Border Insolvency Regulations 2006.
The ruling in this case is positive for debt workouts across different jurisdictions. This case also demonstrates the practical value of the framework of the UNCITRAL Model Law on Cross-Border Insolvency in view of the increasingly transnational nature of restructuring and insolvency proceedings.
Singapore also enacted legislation based on the UNCITRAL Model Law on Cross-Border Insolvency as part of the enhancements to Singapore's debt restructuring and corporate rescue framework that were introduced in 2017. The Model Law has provided a clearer framework for foreign representatives of insolvent estates, such as a US Chapter 11 trustee and the liquidator of a New Zealand company, to seek the assistance of the Singapore Courts in carrying out their duties in Singapore.
Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.