6. Cross-Border Insolvency

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Questions and Answers

What must a foreign company demonstrate to initiate a scheme process in Singapore?

It must be registered in Singapore

It must have a principal office in Singapore

It must have at least one local shareholder

It must be liable to be wound up in Singapore (correct)

What factor might Singapore courts consider when deciding on a judicial management order?

The likelihood of recovery of debts

The corporate structure of the company

The ability of judicial managers to control key foreign subsidiaries (correct)

The financial status of shareholders

Which of the following statements about the definition of a 'company' under the IRDA is accurate?

It excludes foreign corporations regardless of their status

It refers only to local companies registered in Singapore

It includes all types of business entities

It is defined as any corporation liable to be wound up under the Act (correct)

In the case of Deutsche Bank v APP, what was a key reason the judicial management application was dismissed?

Uncertainty about the control of foreign subsidiaries by judicial managers Signup and view all the answers

What is a requirement for a foreign company to be placed under judicial management in Singapore?

It must be liable to be wound up pursuant to the IRDA Signup and view all the answers

What does the term 'Centre of Main Interests' (COMI) refer to in the context of international insolvency?

The main area where the debtor conducts business. Signup and view all the answers

Which of the following correctly describes the roles of foreign liquidators under the UNCITRAL Model Law?

Their powers are dependent on the discretion of the enacting state's courts. Signup and view all the answers

In which scenario would a recognition order issued by the Singapore courts provide automatic relief?

In the situation of a foreign main proceeding. Signup and view all the answers

What is one key characteristic of foreign non-main proceedings under the UNCITRAL Model Law?

The discretion of the Singapore courts can limit their powers and relief. Signup and view all the answers

What does Article 20(3) of the UNCITRAL Model Law stipulate regarding stays and suspensions?

Creditors' rights to enforce security over the debtor's property are unaffected. Signup and view all the answers

Which of the following is not a provision of the UNCITRAL Model Law?

Enforcement of local bankruptcy laws without regard to foreign proceedings. Signup and view all the answers

Which statement accurately reflects the significance of the debtor's registered office in determining COMI?

It creates a rebuttable presumption of the debtor's COMI. Signup and view all the answers

What type of legislative framework does the UNCITRAL Model Law provide in relation to foreign insolvency?

It allows for international cooperation in insolvency matters. Signup and view all the answers

What must courts ensure when granting relief in foreign proceedings?

That the interests of creditors and other interested persons are adequately protected. Signup and view all the answers

Which of the following is NOT a factor for determining substantial connection in Singapore?

The company has a registered office in Singapore. Signup and view all the answers

What happens to the assets of a foreign company after liquidation in its place of incorporation?

They can be transmitted only after all debts incurred in Singapore are paid. Signup and view all the answers

Which of the following is true regarding the UNCITRAL Model Law?

It provides guidelines for seeking other reliefs like witness examinations. Signup and view all the answers

Under Section 246(1)(d) of the IRDA, a foreign company can be wound up in Singapore if what condition is met?

It has a substantial connection with Singapore. Signup and view all the answers

Regarding the administration of liquidation for a foreign company, what must the liquidator consider first?

The debts incurred in Singapore before asset transmission. Signup and view all the answers

Which of the following is a requirement for a foreign company to be registered under Singapore's Companies Act?

The company must have a substantial connection to Singapore. Signup and view all the answers

What does the Singapore regulatory framework stipulate regarding foreign companies using Singapore law?

Foreign companies can choose Singapore law for loans or disputes. Signup and view all the answers

Study Notes

Introduction - international insolvency or restructuring

Involves debtors, creditors, and assets located in different countries.
Parallel legal proceedings may occur in multiple jurisdictions.

Topics

Powers of foreign liquidators or insolvency office holders in Singapore.
Jurisdiction of Singapore courts in winding up foreign companies.
Administration of foreign company assets in Singapore when the company is in liquidation.
Invoking local restructuring legislation in support of foreign insolvency proceedings.

UNCITRAL Model Law

The Model Law serves as a platform for foreign insolvency office holders to access courts in enacting states.
It allows for recognition and assistance to foreign insolvency proceedings.
It provides guidance for cooperation and coordination between courts and insolvency appointment holders of different states.
No reciprocity requirement.

Recognition and Assistance under the UNCITRAL Model Law

The Model Law facilitates recognition and assistance for foreign insolvency proceedings.
The extent of recognition and assistance depends on whether the foreign liquidator is appointed in the Center of Main Interests (COMI).

Center of Main Interests (COMI)

The COMI refers to the place where the debtor's central administration is located.
The law provides a rebuttable presumption that the debtor's registered office is its COMI.

Foreign Main Proceeding vs. Foreign Non-Main Proceeding

Foreign main proceeding: A recognition order results in automatic relief.
Foreign non-main proceeding: Powers and reliefs are subject to discretion of the Singapore courts.

Relief for Foreign Main Proceedings

Relief includes stays against proceedings and execution.
Relief does not affect security rights over debtor property, repossession of goods, and creditor set-off rights.

Relief for Foreign Non-Main Proceedings

Courts may grant reliefs like examination of witnesses, taking evidence, or providing information regarding debtor assets, affairs, rights, or obligations.

Protection of Interests

When granting relief, courts must be satisfied that the interests of creditors (including secured creditors) and other interested persons, including the debtor, are adequately protected

Case Examples

Cases like Re Opti-Medix, Re Tai Soo Suk (Hanjin Shipping), and Beluga Shipping provide relevant common law principles.

Jurisdiction of Singapore Courts to Wind Up Foreign Companies

Section 246(1)(d) of the Insolvency, Restructuring and Dissolution Act (IRDA) states that foreign companies can be wound up in Singapore only if they have a substantial connection with the country.

Factors Determining Substantial Connection

Singapore is the center of main interests of the foreign company.
The company conducts business in Singapore or has a place of business there.
The company is registered under the Companies Act.
The company has substantial assets in Singapore.
The company has chosen Singapore law as a governing law for transactions.
The company has submitted to Singapore courts for dispute resolution.

Administration of a Foreign Company's Liquidation

Issues arise regarding the transmission of assets to the principal liquidation in the place of incorporation.
For certain types of foreign companies, the liquidator in Singapore must first pay debts incurred locally before transmitting remaining assets.

Invoking Singapore Processes in Cross-Border Restructuring

The UNCITRAL Model Law does not cover restructuring of debts and liabilities.
Foreign companies can initiate a scheme of arrangement or judicial management process.

Scheme of Arrangement

A foreign company seeking to initiate a scheme process in Singapore must be liable to be wound up there.

Judicial Management

A foreign company may apply for judicial management under the IRDA definition of "company."

Judicial Management Order

Courts consider the connection with Singapore and other factors when deciding on a judicial management order.

Example of a Judicial Management Application Dismissal

In Deutsche Bank v APP, the application was dismissed due to uncertainties over the judicial managers' control of foreign subsidiaries.

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Description

Explore the complexities of international insolvency and restructuring. This quiz covers the role of foreign liquidators, jurisdiction of Singapore courts, and the implementation of the UNCITRAL Model Law. Test your understanding of the cooperation between jurisdictions in insolvency proceedings.