MinLaw consults on proposed enhancements to Singapore’s corporate restructuring and insolvency regime

21 March 2025

On 11 March 2025, the Ministry of Law (“MinLaw”) launched a public consultation to seek feedback on the recommendations by the Committee to Enhance Singapore’s Corporate Restructuring and Insolvency Regime (“Committee”). The public consultation closes on 8 April 2025.

Allen & Gledhill Partner Jo Tay is a member of the Committee.

Recommendations by the Committee

MinLaw convened the Committee to look into measures to further enhance Singapore’s corporate debt restructuring and insolvency (“R&I”) framework, and to attract international users to Singapore’s R&I regime. The Committee carried out its work from October 2023 to October 2024.

The Committee has published a report detailing its views, perspectives, and recommendations. The nine recommendations, grouped into four broad categories, are summarised below.

Strengthening the judicial management regime 

  • To reconceptualise the judicial management regime: The judicial management (“JM”) regime should be reconceptualised to retain only its restructuring and turnaround functions. While the Committee recognised that there have been some cases where the JM’s recovery function (i.e. better realisation as compared to winding up) might have been achieved, on balance, it was viewed that reconceptualising the JM regime would likely facilitate more positive outcomes.
  • To continue allowing the debtor to put itself into JM: Both creditors and the debtor should continue to have standing to apply to the court to place the debtor in JM. This would give the debtor the added option to seek to restructure or turnaround its business via the reconceptualised JM regime, in addition to the scheme of arrangement regime. The Committee considered whether to allow only creditors to place a debtor into JM, restricting the debtor to the sole option of restructuring its debts via a scheme of arrangement. However, the Committee did not recommend this because (i) the JM is a neutral officer-led proceeding which should operate in the same manner regardless of the identity of the applicant for JM, and (ii) the value proposition and features of the JM regime differ from the scheme of arrangement regime.
  • To remunerate the judicial manager based on a multi-stage remuneration model incorporating “success fees”: The remuneration of the judicial manager should be based on a model that allows flexibility to better align the judicial manager’s remuneration with successful outcomes in JM proceedings. In particular, the Committee encouraged the structuring of the judicial manager’s fees to include a “success fee” component. The Committee recommended that the Ministry consider a cost-effective multi-stage remuneration model that can be utilised as a standard template for a judicial manager’s remuneration in JM proceedings. One option could be to allow for remuneration on a time costs basis during an initial period for a judicial manager to get up on a case, and to thereafter link the judicial manager’s remuneration to the achievement of his/her proposals and objectives of the JM. The latter could be achieved by incorporating the judicial manager’s remuneration as part of the Statement of Proposals under section 107 of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”). The Committee underscored that it would not be commercially desirable to prescribe a specific renumeration, and that the conditions of “success” for the conditional payment must be mutually agreed between the judicial manager and the creditors.
  • To retain the judicial manager’s right to pursue clawback actions: The judicial manager should continue to have the ability to pursue clawback actions in the reconceptualised JM regime, in order to allow the judicial manager to recover assets of the debtor. The potential pursuit of clawback actions could be a useful lever to incentivise and gain support from the different creditors who have an interest in the restructuring plan. Removing the right of judicial managers to pursue clawback actions would unduly constrain judicial managers in the full performance of their functions; and mean that clawback actions can only be undertaken by a liquidator, in the terminal process of winding up.

Refining the cross-class cramdown in schemes of arrangement

  • To remove the requirement that a majority in number of creditors representing three-fourths in value of creditors meant to be bound by the proposed scheme must vote in favour of the restructuring plan: The Committee proposed to refine the cross-class cramdown threshold requirements by removing conditions requiring a majority in number of creditors representing three-fourths in value of creditors meant to be bound by the proposed scheme to vote in favour of the restructuring plan under section 70 of the IRDA. Section 70 of the IRDA provides a cross-class cramdown mechanism in order to prevent veto by a minority of creditors in a dissenting class simply because they belong in a separate class, provided such creditors are treated fairly under the proposed scheme.
  • To expand the scope of cross-class cramdown to include shareholders: The Committee recommended expanding the scope of the cross-class cramdown provisions to encompass shareholders in appropriate circumstances, reflecting the economic reality of the debtor’s capital structure in a financially distressed situation. However, shareholders should be given an opportunity to retain an interest in the debtor if they contribute “new value” to the debtor as this could incentivise them to continue their initial support for the debtor. The Committee also recommended lowering the cross-class cramdown threshold requirements.

Refining the framework and tools for efficient debt restructurings

  • To streamline the process for disposing of the company’s undertaking or property, and issuing new shares in a JM or scheme of arrangement: The Committee recommended relooking at the requirements in the Companies Act 1967 for (i) approval of the company in general meeting in order to dispose of the whole, or substantially the whole, of the company’s undertaking or property, and (ii) for the company to issue new shares. The proposed streamlining better facilitates the carrying out by debtor companies of their restructuring plans in a judicial management or scheme of arrangement.
  • To allow the court to assess and appoint a “Restructuring Officer” in a scheme of arrangement: The Committee recommended that (i) the court be provided with the discretion to assess and appoint a Restructuring Officer as an officer of the court to assist with a restructuring under a scheme of arrangement; (ii) the appointment of such a role should not be mandatory in all cases but is targeted at cases where the assistance of a Restructuring Officer would be useful or appropriate; and (iii) the specific role should offer flexibility for the court to limit or designate the functions that the role would perform. The Committee did not view that it was necessary to include the same power for the court to appoint a Restructuring Officer in the context of the JM regime.

Adopting the UNCITRAL Model Law on Enterprise Group Insolvency and the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments

  • To adopt the UNCITRAL Model Law on Enterprise Group Insolvency and the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments: The Committee recommended adopting the UNCITRAL Model Law on Enterprise Group Insolvency and the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments. This would further strengthen Singapore’s ability to deal with international, cross-border R&I matters, complementing Singapore’s earlier adoption of the UNCITRAL Model Law on Cross-Border Insolvency in 2017. If enacted, Singapore would be one of the first States to implement the two Model Laws, demonstrating its commitment to mutual cooperation and international best practices in the area of international insolvency.

Reference materials

The following materials are available on the MinLaw website www.mlaw.gov.sg:

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