Singapore has made "a good start" in its bid to become a debt restructuring hub in the region, with six workout cases filed before its courts after it adopted US Chapter 11-like incentives in local company laws this year, said Senior Minister of State for Law and Finance Indranee Rajah.
Indonesian developer Bakrieland Development is set to complete its group restructuring after a plan by its unit BLD Investments was sanctioned by a local judge earlier this month in the first of such cases. Other publicly disclosed filings involved Attilan Group, TT International, Emas Offshore and Nam Cheong.
"The fact that we have six filed this year alone after the amendment is an indication that people are certainly looking to try out this new restructuring regime," said Ms Indranee in an interview on Tuesday. The key to a good restructuring is for counsel, the parties and the court "to take a commercial approach to it", she said.
Singapore, aiming to bolster its position as a centre for debt revamps, amended the Companies Act in March, giving worldwide effect for debt moratorium, enabling debtor-in-possession financing, and granting rescue-capital providers super-priority claims on assets over existing creditors. Such features are among the hallmarks of US bankruptcy law.
A fallout in global oil prices from mid-2014 has roiled firms in the city state, a regional energy-industry hub as well as financial centre. There has been about $1.4 billion of local bond defaults since late 2015, led by offshore oilfield services groups, Bloomberg-compiled data shows.
For Bakrieland, "the approach of the court was commercial, pragmatic and progressive in the spirit of the new provisions", said Mr Ashok Kumar, a partner at law firm BlackOak in Singapore who advises the local unit of the Indonesian developer in its US$290 million (S$390 million) debt restructuring. The cross-border moratorium gave it sufficient time to engage creditors and secure support for the revamp, he said.
Ezra Holdings and China Fishery Group are among Singapore-listed groups that have filed for Chapter 11 bankruptcy protection from creditors. Closely held semiconductor assembler Global A&T Electronics is preparing a pre-pack Chapter 11 filing after obtaining 95 per cent support from note holders on its restructuring offer.
The fact that we have six filed this year alone after the amendment is an indication that people are certainly looking to try out this new restructuring regime.
MS INDRANEE RAJAH, Senior Minister of State for Law and Finance, on Singapore's adoption of US Chapter 11-like incentives in local company laws this year.
While Singapore seeks to capture a slice of revenue from debt restructuring works, the amended legislation was aimed at helping troubled companies get back on their feet, Ms Indranee said. The incentives came about after it met US officials to study the popularity of the Chapter 11 restructuring regime, she added.
"One thing they emphasised is that we have to grapple with the commercial reality; judges were flexible in the way they try the new approaches, provided you get the companies back up," Ms Indranee said. "What we were looking for was a good, substantive framework that would help companies get back on their feet, and ensure all the stakeholders get something out of it."