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Parliament: Singapore introduces omnibus bill to update insolvency, debt restructuring laws
AN omnibus bill to update various aspects of Singapore's insolvency and debt restructuring laws was introduced in Parliament on Monday.
One of the main objectives of the Insolvency, Restructuring and Dissolution Bill is to consolidate the personal and corporate insolvency and restructuring laws, which are in two separate statues: the Bankruptcy Act and Companies Act.
When the new bill comes into force, the Bankruptcy Act will be repealed, and provisions in the Companies Act relating to corporate insolvency and restructuring will be deleted.
The bill will also establish a regulatory regime for insolvency practitioners, introducing minimum qualifications, conditions for the grant and renewal of licences, and a disciplinary framework. The regime will be administered by the Ministry of Law's Insolvency and Public Trustee's Office.
Other changes include a new restriction of ipso facto clauses in debt restructuring. Such clauses allow a contract to be terminated or changed when a specified trigger event happens, such as insolvency or restructuring. The use of such clauses is currently unrestricted, which poses difficulties for a company that is restructuring. The new bill restricts ipso facto clauses that are triggered upon the commencement of restructuring proceedings.
Said the Ministry of Law: "This is intended to facilitate restructuring where a distressed company’s business relies on contracts that contain such ipso facto clauses."
The Ministry of Law said that the reforms, taken as a whole, "will benefit local businesses experiencing financial difficulties, position Singapore as a location of choice for foreign debtors to restructure; and create new opportunities for insolvency professionals (including lawyers and accountants), distressed debt funds and financial institutions".
The bill arises from the Insolvency Law Review Committee's recommendations in October 2013, with the Committee to Strengthen Singapore as an International Centre of Debt Restructuring making further recommendations in April 2016. The recommendations of both committees have been implemented in phases, with the first involving amendments to the Bankruptcy Act in July 2015 and the second, amendments to the Companies Act in March 2017.
The bill introduced on Monday represents the third and final phase, implementing the remaining recommendations, as well as including further reforms based on industry feedback.