SINGAPORE - There will soon be greater cooperation and communication for cross-border insolvency proceedings.
On Wednesday (Feb 1), a new set of guidelines will be officially implemented between Singapore's Supreme Court and the United States bankruptcy court for the district of Delaware .
More jurisdictions are expected to follow suit.
The guidelines serve as a roadmap for how courts communicate. For instance, in appropriate situations, joint hearings involving the different courts may be held, although each court will retain its independence and impartiality, said Singapore's Supreme Court in a media release on Wednesday.
This is expected to benefit stakeholders by reducing legal costs and preserving the value of financially distressed businesses. It comes at a time of globalisation and the shift in how corporations conduct their businesses and organise themselves.
Prior to the existence of these guidelines, communication between the courts was carried out on an ad hoc basis and there was "great uncertainty" over whether and how the courts may communicate with each other when faced with cross-border insolvency cases, added the Supreme Court.
The idea for greater coordination was first mooted by Chief Justice Sundaresh Menon early last year. The Supreme Court then reached out to other commercial courts around the world.
Last October, judges from several jurisdictions - Australia, the British Virgin Islands, Canada, the Cayman Islands, Britain, Hong Kong (as an observer), Singapore and the United States - developed the draft guidelines at the inaugural Judicial Insolvency Network.
The guidelines also provide a structure for joint hearings, enabling two or more courts to simultaneously record evidence and hear arguments.
The Supreme Court said such coordination should lead to better financial returns for all parties involved, adding: "With this, cross-border insolvency matters can be better managed for the benefit of debtor companies, banks and other creditors, employees and other stakeholders."
The Supreme Court said the guidelines also help cement Singapore's position as a financial and legal hub regionally and globally, adding: "It is hoped that, before long, the guidelines will circle the globe."