Opening Speech by Minister for Culture, Community and Youth and Second Minister for Law Edwin Tong SC at Singapore Global Restructuring Initiative Conference
14 November 2022 Posted in [Speeches]
Ladies and gentlemen
- Good morning. Thank you for inviting me to speak at this inaugural launch conference of the Singapore Global Restructuring Initiative (“SGRI”).
I regret that I cannot be with you today as I am travelling.
a) I am happy that technology has allowed me to share my thoughts on:
(i) The role of the insolvency community in the global landscape;
(ii) Singapore’s progress and initiatives;
(iii) Further enhancements that we are looking into, to adapt to the new global reality; and
(iv) Singapore’s participation in and contributions to the international insolvency landscape.
At the outset, let me congratulate the organising team behind this conference. I understand that there are participants from at least 16 different jurisdictions; and there will be academic works presented on various topics in insolvency including:
a) Reinventing insolvency law;
b) Insolvency law in emerging economies;
c) Remuneration of Insolvency Practitioners;
d) Litigation Funding in Insolvency Proceedings; and also,
e) Insolvency and New Technologies.
- This is a remarkable achievement for a relatively new academic centre – established only in 2020.
- Besides this conference, the SGRI has jointly, with the University of Cambridge, organised 3 roundtables. This brought together leading experts across different jurisdictions to discuss global developments in corporate insolvency law. The SGRI is also actively involved in an upcoming event in Manila in December, to discuss insolvency reform in the Asia Pacific. This is co-chaired with the Asian Development Bank, INSOL International, University of Chicago, and University of Cambridge.
- With these events and other contributions, the SGRI is a welcome addition to Singapore’s burgeoning restructuring and insolvency ecosystem. It is a dedicated platform that promotes cutting-edge research on insolvency laws; and collaboration between academics, practitioners, judges, and policymakers from all over the world.
- This is especially important in today’s fast-changing, and some may say, fragmented landscape – where a well-designed and well-functioning insolvency framework is essential to: rehabilitation and rescue; or orderly winding down of businesses.
II. Changed Global Landscape
- The insolvency community – both locally in Singapore and internationally – is critical, as it undergirds the insolvency framework and enables it to be implemented effectively.
- In today’s world, the global state of affairs is in flux; and the future economic environment, uncertain.
Let me touch on them briefly.
a) The world is emerging from the pandemic, though there are stressors still lingering from the socio-political and economic effects of the past couple of years.
b) There are geo-political tensions, such as the conflict between Russia and Ukraine; and the tensions between the US and China.
c) And there is rampant inflation, with prices of energy, commodities, and labour, rapidly rising. In response, central banks around the world have turned to monetary tightening, leading to increased funding costs for businesses.
- In addition to these pressures, there are other trends in the system that impact businesses. For example, climate change, population change, and digitalisation.
- It is in this reality, that the insolvency community is very much needed, being in a position to assist businesses, and in particular, those that may need time and space, to adapt to these unexpected shocks, and to reinvent themselves in response to the deeper structural changes. For other businesses, the insolvency community will provide for an orderly winding down. This will facilitate the best outcome in the circumstances and allow all parties to move forward.
- The insolvency community also contributes to the development of insolvency law and practice.
- Conferences such as this one, gather different groups within the insolvency community to push forward the discussions on cutting edge topics and research.
III. Singapore’s Progress
- Singapore has harnessed and benefitted greatly from the contributions of the insolvency community.
- Guided by the recommendations of two expert committees, Singapore embarked on its journey to strengthen the insolvency regime to ensure it remains robust, effective and fair in today’s commercial context.
Some of the key changes in our framework include:
a) The Companies (Amendment) Act in 2017 which enhanced Singapore’s restructuring frameworks through the engrafting of US Chapter 11 features, and enacted domestic legislation based on the UNCITRAL Model Law on Cross-Border Insolvency.
b) The Insolvency Restructuring and Dissolution Act 2018 - a milestone omnibus legislation that consolidated and also harmonised the approaches across both personal and corporate regimes, and continued the enhancement of the corporate rescue framework.
c) I recently shared another development - the Courts (Civil and Criminal Justice) Reforms Act 2021 and Legal Profession (Amendment) Act 2022, which clarified the jurisdiction of the Singapore International Commercial Court (“SICC”), over international insolvency and restructuring cases, and refined the scope of foreign lawyers’ involvement in such cases.
- In making these changes, we have focused on offering a balanced and robust framework. One that is practical and responsive to the needs of the users and affected parties; one that is neither pro-debtor nor pro-creditor, but looks at the range of options and interests of the different parties.
Let me touch on an example that was successfully resolved under this framework. Pacific International Lines (“PIL”), the world’s 12th largest liner company and Southeast Asia’s largest carrier encountered difficulties due to, amongst others, changes in the shipping industry.
a) The stakeholders of PIL have shared their personal experience - that through collaboration, bold spirit and action of the stakeholder groups and their advisors, the company swiftly completed a pre-negotiated restructuring.
b) In this regard, it has been observed1 that while expediency in resolving the matter was a consideration due to PIL’s position as a debtor in financial distress, the rights of creditors were also protected.
c) I highlight that PIL made early and full repayment of its scheme debts. Additionally, just recently, to mark its return to financial health. This year, PIL donated $1.7 million to self-help groups in Singapore.
IV. Looking to the Future – Further Refinements and Growth
- Singapore has achieved note-worthy progress on its journey thus far. We will continue in our work to refine and update our insolvency frameworks.
- First, we are studying how we can strengthen the corporate insolvency regime. In particular, the judicial management (JM) regime – to ensure that it is not used as an inevitable precursor to winding up. The rate of cases that emerged successful after a JM regime stands at about 27% - 28%2. We will be studying potential changes, so that the JM regime will better facilitate effective outcomes based on today’s reality and business practices, whether this be a successful rehabilitation, or quick and orderly winding down.
Some areas of reform that we are considering, include:
a) Ensuring early clarity on the profile of the companies to be placed under JM and ascertaining whether JM is the most suitable insolvency option in this case;
b) Tailoring the expertise of the judicial manager to the specific industry sector of the company – especially important in specialised industries; and
c) Offering different modes of financial incentives for judicial managers.
- We intend to study this and other areas carefully.
Simplified Insolvency Programme
- We are also looking at micro- and small- enterprises, which form a large part of the economy in Singapore, and other countries as well. Such businesses contribute to job creation and preservation, entrepreneurship, innovation, and also social development.
- Due to their nature, micro- and small- businesses encounter unique challenges, amplified by the pandemic.
- In response, Singapore, like many jurisdictions around the world, adopted simplified insolvency proceedings. The temporary Simplified Insolvency Programme (“SIP”), introduced in 2020, provides simpler, faster, and lower cost proceedings.
- These measures come at a time where there has been a concerted focus in this area, as demonstrated in the World Bank’s updated Principles for Effective Insolvency and Creditor/Debtor Regimes, released in 2021, the UNCITRAL Legislative Guide on Insolvency Law for Micro- and Small Enterprises, finalised in 2022, and the Asian Business Law Institute and the International Insolvency Institute Guide on the Treatment of Insolvent Micro and Small Enterprises in Asia, published in 2022.
- We are also studying this, in order to develop an effective and best-in-class framework for smaller entities in financial distress.
Singapore and the world
- As Singapore evolves its insolvency regime to meet the complexities of our changing world, we are glad to see other jurisdictions and international organisations on a similar journey – providing fresh perspectives and ideas as well.
- Besides learning from international developments and best practices, Singapore is also, increasingly, a trusted contributor to this wider discussion. It is a natural extension of the increasing depth and expertise of judges, practitioners, academics, and experts from both overseas and local jurisdictions, especially with the Singapore International Commercial Court being a nodal forum for international and commercial insolvency cases.
- This is important, especially as we are likely to see a fragmented landscape, that will affect both domestic and cross-border businesses alike, thereby, necessitating coordinated resolution efforts.
- Many of you would be aware of or have been involved in cases that require coordinated efforts to resolve cross-border businesses. These often involve multiple interested parties, assets, businesses or presence in different jurisdictions.
- From Singapore’s vantage point, these include:
a) The successful restructuring of Indonesian conglomerate, Indonesia garment manufacturer Pan Brothers. This involved applications to courts in Singapore, Indonesia, and the United States for orders over the company and 20 of its subsidiaries. The company sought to restructure three tiers of debts: US$200 million senior notes, US$150 million revolving credit facility, and US$68 million bilateral facility claims.
b) Moving forward, we are also likely to see more proceedings involving crypto platforms, following the recent filings in Singapore for Zipmex, Vauld, and Hodlnaut.
- This reality has fuelled broader concerted efforts in this area to develop international best practices and facilitate a degree of harmonisation.
- A key organisation is the United Nations Commission on International Trade Law (UNCITRAL), which promotes, amongst other matters, the harmonisation of insolvency law across jurisdictions. The Model Law on Cross-Border Insolvency is celebrating its 25th anniversary this year. Legislation based on the Model Law has been adopted in 53 states across 56 jurisdictions. The Model Law is a centrepiece in the practice of cross-border insolvency law today and is a pillar in the development of international insolvency law.
- Since it was effected in Singapore in 2017, the Model Law has been used on numerous occasions. There have been several internationally recognised decisions from the Singapore Supreme Court on the Model Law, contributing to the global body of case law for consistent interpretation and application of the text.
Looking ahead, it is thus timely that in 2021, the UNCITRAL Commission referred two projects to the insolvency working group two projects:
a) First, consideration of legal issues arising from civil asset tracing and recovery in insolvency proceedings; and
b) Secondly, the applicable law in insolvency proceedings.
These are important projects at the heart of international insolvency.
a) The civil asset tracing and recovery project is intended to benefit stakeholders by reducing the time and costs involved in tracing and recovering assets, where assets are located in a foreign jurisdiction.
b) The project on applicable law is intended to benefit stakeholders as it seeks to provide harmonised principles and rules on insolvency law, which will increase the certainty and predictability of cross-border insolvency cases.
Judicial Insolvency Network
- Another significant development is the Judicial Insolvency Network (JIN) – a platform for insolvency judges across the world to provide judicial thought leadership, develop best practices, and facilitate communication and cooperation amongst national courts in cross-border insolvency and restructuring matters.
- The JIN produced the JIN Guidelines and JIN Modalities, focusing on the principles and mechanics of court-to-court communication. Each of these have been adopted by several courts around the world.
- We are glad that Singapore was one of the first members of the JIN and hosted its inaugural meeting in Singapore in 2016.
- The JIN Guidelines and Modalities have allowed courts around the world to be global in their approach towards the cross-border cases.
As I mentioned earlier, the insolvency community is important in today’s world in so many ways. We see the passion and contribution of the community –
a) Its initiatives, including ideas brought forth in the papers to be presented at this conference.
b) Its lively discussion at panel sessions involving practitioners, academics, and policy-makers; and
c) The collaborative efforts and open dialogue amongst members of the community in crafting solutions in different areas of insolvency law and practice.
- These are part of the wider discourse on strengthening insolvency laws globally.
- Singapore will continue to provide opportunities for such discourse to take place and actively participate in, and contribute to these discussions.
- There are many interesting panels on the programme, including on a number of topics which I have touched on. I hope you will have a spirited and enriching discussion at the conference.
- Thank you.
1. “The swift and silent restructuring of Singapore’s Pacific International Lines” by Stephanie Yeo (WongPartnership) published 23 June 2021 on the SGRI Blog ↩
2. Cases from 1996 to 2010.  of Chapter 6: Judicial Management of Report of The Insolvency Law Review Committee 2013↩
Last updated on 14 November 2022