SINGAPORE Law and Practice Contributed by: Renu Menon, May Ng, Blossom Hing, SC and Ong Ken Loon, Drew & Napier LLC
• Preferential creditors – under the IRDA, the follow- ing are some key preferential creditors who must be paid in priority to all other unsecured debts: (a) costs and expenses of the winding up incurred by the liquidator of the insolvency company; (b) costs of the applicant for the winding up order; (c) all wages and salary payable to any employee; and (d) retrenchment benefit or ex gratia payment, subject to the prescribed limit. • Unsecured creditors, ie, creditors who do not hold security over the debtor company’s assets, are paid on a pari passu basis after the secured and preferential creditors are paid. 7.3 Length of Insolvency Process and Recoveries The time taken to complete a typical insolvency pro- cess depends on various factors, such as, the amount and location of assets available for distribution and the number of creditors involved. This may range from months to even years. Similarly, creditors’ recoveries may also vary widely (see 7.2 Waterfall of Payments for the order in which payments are made on a company’s insolvency). 7.4 Rescue or Reorganisation Procedures Other Than Insolvency In Singapore, company rescue or reorganisation pro- cedures outside of insolvency proceedings include judicial management and schemes of arrangement. Judicial Management Judicial management is a process where a judicial manager is appointed to rehabilitate the distressed company, preserve all or part of the company’s busi- ness as a going concern, or achieve a more favour- able outcome for the company’s creditors than if the company was wound up. As part of the judicial management process, the judi- cial manager will take over the property, affairs and
pany and its creditors or shareholders that enables the company to restructure its debts while still operating. In a scheme of arrangement, the company retains control of its property, affairs and operations. 7.5 Risk Areas for Lenders A key risk area for lenders is that certain transactions which they may enter into with the borrower prior to the commencement of judicial management or wind- ing up proceedings, eg, for the repayment of the debt, are at risk of being set aside. Where a company is in judicial management or is being wound up, the judicial manager or liquidator (as the case may be) may apply to court for an order to set aside certain transactions at an undervalue and/ or transactions which constitute an unfair preference which occurred prior to the commencement of judi- cial management or winding up. This clawback period ranges from three years (transactions at an under- value) to two years (unfair preferences, if given to a person connected with the company; if not, one year) before the commencement of liquidation or judicial management. Furthermore, generally a floating charge on the debt- or company’s property created within one year (two years if in favour of person connected with the com- pany) prior to the commencement of the judicial man- agement or winding up is invalid except to the extent of value of the consideration (to the extent that the consideration consists of money paid, goods or ser- vices supplied, or the discharge or reduction of debt) for the creation of the charge together with interest, unless the debtor company was solvent at the time the floating charge was created.
8. Project Finance 8.1 Recent Project Finance Activity
In 2025, project finance remains robust in the infra- structure, renewable energy and real estate sectors, with a focus on sustainable development, particu- larly in green projects such as solar, waste-to-energy facilities and decarbonisation efforts, reflecting Singa-
operations of the company. Schemes of Arrangement
A scheme of arrangement is a court-sanctioned com- promise or arrangement between a distressed com-
524 CHAMBERS.COM
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