In the first reported decision of its kind in Singapore, the High Court of Singapore has recognised a US Chapter 7 Trustee and US Chapter 7 bankruptcy proceedings as a foreign main proceeding. The decision also provides guidance in Singapore on the relevant date on which the assessment of the debtor’s COMI should take place under the UNCITRAL Model Law on Cross-Border Insolvency, as well as other factors that the Singapore court will consider in determining a company’s COMI. The case is of interest in Singapore where the country’s swift moving legislature has created a platform to become a global debt restructuring hub and enacted the Model Law in 2017.
The company in question was a Singapore incorporated entity with the wider group including 16 entities organised under the laws of the BVI. The Singapore court determined that as the company’s “primary decision-makers” and a substantial portion of its creditor base was located in the US, the presumption that Singapore was its COMI (as the place of incorporation) was displaced in favour of the US. The applicant also faced criticism for “[f]louting a Singapore order” but as that injunction was discharged by the consent of all parties in 2018, it was found by the Singapore court that “[n]o reason remains to deny recognition on the basis of public policy”. The Singapore court had earlier ruled to refuse full recognition on the basis that such application undermined the administration of Justice in Singapore where a Singapore injunction order was in force.
The decision has also drawn interest from commentators further afield due to the divergence from the European, UK and Australian interpretation of the Model Law, with concerns raised by some that the flexible approach adopted may prove damaging for certainty and predictability leading to forum shopping and jurisdictional conflicts, the very concepts that adoption of the Model Law is intended to avoid. For most (particularly creditors), certainty and uniformity is the objective where the Model Law is concerned and we are interested to see how this area of law develops, both in Singapore and internationally.