Sweeping reforms are on the table as part of moves to strengthen Singapore as a centre for debt restructuring, which involves helping troubled companies renegotiate their debts.
The Government, which wants Singapore to grab a bigger slice of what is a fast-growing business, was handed a road map yesterday in the form of 17 recommendations from a review committee. Its proposals fall into three key areas.
One involves enhancing of Singapore's legal framework for restructuring by creating customised rules and procedures.
This includes a specialist insolvency Bench for restructuring cases comprising both Singapore and international judges.
The committee also recommended that the Singapore International Arbitration Centre and the Singapore Mediation Centre develop rules for insolvency and restructuring. It also proposed increasing the availability of rescue financing and strengthening the insolvency profession through multidisciplinary training.
The 17-member committee, which comprised lawyers, insolvency and other financial professionals, and Monetary Authority of Singapore officials, wants to attract distressed debt financiers and specialists to Singapore.
It also wishes to raise international awareness of Singapore's restructuring regime and capabilities through increased involvement in international insolvency organisations and research.
Committee co-chairman Indranee Rajah said commercial laws would be modernised to implement the recommendations and proposals. New legislation to strengthen the legal framework is likely to be presented to Parliament within the next six to nine months in the form of a new Omnibus Insolvency Act.
Ms Rajah, who is also Senior Minister of State for Law and Finance, said Singapore has a trusted judicial system which gives the country an advantage when offering debt-restructuring services.
"Singapore can be a global debt-restructuring centre like New York or London," she noted during a briefing yesterday.
"International arbitration has been going on for many years. Building Singapore to be a global services hub, we need lawyers, accountants and financiers as well to create a buzz of activity.
"We need to generate a new type of rescue financing with the injection of new money.
"Even though the global economy is sluggish, Asia will be the fast-growing place where more economic activity is going forward with more cross-border activity. We can build an economy that can supply this service to the region."
Ms Rajah said the committee, which started work in May last year, had reviewed Chapter 11 of the United States Bankruptcy Code which prevents creditors from winding up a financially distressed company while it attempts to find ways to restructure its debts.
Committee member Manoj Pillay Sandrasegara believes the introduction of the Omnibus Insolvency Act containing the new recommendations is the right step in establishing Singapore as Asia's pre-eminent debt-restructuring centre.
Mr Sandrasegara, a partner at WongPartnership, said the new regime will provide for an automatic moratorium of 30 days to provide time for the company to undertake restructuring efforts.
This article was first published on July 21, 2016.
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