SINGAPORE Law and Practice Contributed by: Renu Menon, May Ng, Blossom Hing, SC and Ong Ken Loon, Drew & Napier LLC
Arbitration is put into force with modifications) without a retrial of the merits of the case. 6.4 A Foreign Lender’s Ability to Enforce Its Rights Typically, the fact that a lender is foreign does not affect its ability to enforce its rights under a loan or security agreement. That said, if a foreign lender com- mences legal proceedings in Singapore to enforce its rights, the borrower (ie, defendant) may apply to court to ask that the lender provide security for its costs. In that case, the fact that the lender is ordinarily resident outside of Singapore is one factor which the Singapore courts will take into account in determining whether to grant the security for costs. The commencement of insolvency and restructuring- related processes may impact the enforcement of a loan or security primarily through the imposition of statutory moratoria, in the following ways. Winding Up The IRDA provides for an automatic moratorium upon (i) the making of a winding up order, or (ii) the appoint- ment of a provisional liquidator. During the automatic moratorium period, no action or proceeding may be proceeded with or commenced against the company except by permission of the court and in accordance with such terms as the court may impose. However, such a moratorium generally does not apply to the enforcement of security. Where a company is wound up on an insolvent basis, a secured creditor cannot claim any interest on their debt after commencement of the winding up (Com- mencement Date), unless the secured creditor realises their security within 12 months after the Commence- ment Date, or such further period determined by the liquidator. Judicial Management The IRDA provides for an automatic moratorium when (i) an application for a judicial management order is made, or (ii) when a written notice of the appointment 7. Bankruptcy and Insolvency 7.1 Impact of Insolvency Processes
of an interim judicial manager is lodged (ie, where the judicial management process is commenced by way of a creditors’ resolution instead of by order of court). During this automatic moratorium period, among other things, (i) no step may be taken to enforce any security over any property of the company, or to repossess any goods under any hire‑purchase agreement, chat- tels leasing agreement or retention of title agreement, except with the permission of the court and subject to such terms as the court may impose; and (ii) no enforcement order or other legal process may be issued, continued or executed, and no distress may be levied, against the company or its property, except with the permission of the court and subject to such terms as the court may impose. Under the IRDA, an automatic moratorium also takes effect upon the court’s grant of a judicial management order, in such event, creditors are generally prohibited from enforcing any security over the company’s assets without the court or judicial manager’s permission. Similarly, a secured creditor cannot claim any interest on their debt from the date permission was granted unless the secured creditor realises their security with- in 12 months of receiving permission to do so, or such further period determined by the judicial manager. Schemes of Arrangement The Singapore courts may grant a moratorium which may cover the enforcement of security. Under the IRDA, an automatic 30-day moratorium comes into effect on the filing of a moratorium appli- cation (subject to the relevant statutory requirements being satisfied). In addition, related companies of the subject company can apply to extend the moratorium to include them. 7.2 Waterfall of Payments Creditors are broadly paid out in the following order on a debtor company’s insolvency: • Secured creditors may enforce their rights in respect of the security taken over the debtor com- pany’s assets ahead of preferential and unsecured creditors.
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