01 Apr 2019
High Court in UK recognises Singapore’s new moratorium law for debt restructuring in landmark decision
In what is seen as a landmark decision, the High Court of England and Wales has recognised Singapore’s new moratorium law for companies unable to pay its creditors. The ruling is positive for debt workouts across different jurisdictions and a boost to the Republic’s ambition to become Asia’s debt restructuring hub.
Rajah & Tann Singapore and the London office of US law firm, Lord Locke LLP, said today that the High Court of Justice Business and Property Courts of England and Wales had on 25 March 2019 recognised the moratorium relief granted by the Singaporean court to their client H&C S Holdings Pte Ltd under Section 211B(1) of the Companies Act (Cap. 50) as foreign main proceedings under the UNICITRAL Model Law.
This is the first time a court outside Singapore has recognised section 211B of the Companies Act which deals with the enhanced moratorium in relation to a court-sanctioned arrangement or compromise (known as a scheme of arrangement) between a company and its creditors when the former is in distress or insolvent.
The section was introduced by Parliament in 2017 as part of a major overhaul of Singapore’s corporate restructuring and insolvency laws. It made it easier for companies, especially those with creditors from around the world, to be rescued and rehabilitated. The overhaul was also aimed at attracting debtors and creditors in the region to come to Singapore for corporate restructuring.
In the case of H&C S Holdings, Rajah & Tann’s Managing Partner Patrick Ang submitted an expert report to support the Recognition Application and explained, among others, the background of the 2017 Amendment Act and section 211B.
During the English court hearing, it was noted that this case was “uncharted territory,” there having not been a recognition of this type of proceedings in a UK court before. ICC Judge Jones was satisfied with the arguments put forth by Counsel, Jennifer Meech of Enterprise Chambers (instructed by David Grant and Marc Abrahams of Locke Lord), and evidence before him that the requirements of the British Cross Border Insolvency Regulations (incorporating the Model Law) had been met. Locke Lord was instructed by Rajah & Tann Singapore (assisted by partners Chua Beng Chye and Raelene Pereira).
Mr Ang said: “This ground-breaking decision is a significant development for Singapore’s debt restructuring and insolvency regime. It addresses previous uncertainties on whether the English courts would recognise our new moratorium order and whether a Singapore scheme of arrangement proceeding is a ‘foreign proceeding’ for purposes of UK’s cross-border insolvency regulations.”
Mr Grant said: “We are delighted with the result. This is an important acknowledgment of the doctrine of universalism of restructuring and insolvency under the UNCITRAL Model Law. We hope to see more cases of this nature rightly recognised by the English Court.”
Rajah & Tann Singapore is one of the largest full-service law firms in Singapore and South East Asia, with market leading practices in M&A, dispute resolution, international arbitration, shipping, insolvency, restructuring, capital markets, competition law, corporate and commercial, technology, media and telecommunications, among others. Through Rajah & Tann Asia, it is a member of one of the largest legal networks in ASEAN with over 750 fee earners.
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