Spotlight on Singapore: Local and global connectivity in action

This article is based on a presentation made at Quantuma’s Navigating the unique structures and stakeholder interests in insolvency and restructuring in Asia-Pacific seminar, which was held in London in November 2024.

Why are insolvency and default risks rising?

In markets across the Asia-Pacific and beyond, high inflation and interest rates have heightened the challenges of securing finance and servicing debts.

Singapore is a strategic location for investment into emerging markets in the Asia-Pacific region. It is also a leading centre for private credit funds lending to companies across the region. Many of the defaults and insolvencies in other parts of the Asia-Pacific could therefore affect companies based, operating or investing in Singapore.

Why is Singapore such an important hub for restructuring?

When looking for a jurisdiction to initiate or enforce legal proceedings relating to multinational companies, Singapore has the advantages of well-developed legislation and case law.

The scope and procedures within Singapore’s Insolvency, Restructuring and Dissolution Act (IRDA) would be familiar to lawyers in other jurisdictions applying common law. They include scheme of arrangement provisions similar to those in the UK’s Insolvency Act and US Chapter 11.

Crucially, Singapore adopted the UNCITRAL Model Law as part of the Third Schedule of the IRDA. In January 2024, the Singapore International Commercial Court (SICC) issued its first recognition of cross-border insolvency. The case upheld a contested repayment suspension agreed in Indonesia as part of the restructuring of the country’s national airline.

What are the complicating factors and how can they be overcome?

Mutual recognition only applies in some jurisdictions
Few Asia-Pacific jurisdictions offer international recognition and enforcement of restructuring proceedings. Even where they do, rulings can be both delayed and unpredictable.
However, if significant interests are located in Singapore, initiating legal proceedings here offers access to a proven and enforceable set of procedures. The restructuring of PT Modernland Realty, a large Indonesian-based property developer, highlights the effectiveness of this approach. The developer had issued US$390 million of bonds that were listed on the Singapore Exchange. Citing financial stress in the Indonesian property sector, the developer launched a Singapore Scheme of arrangement to restructure its bonds. The Quantuma team was engaged by the ad-hoc committee of bondholders to drive the restructuring and ensure bondholders interests were protected throughout the process. We achieved the successful restructuring and subsequent recognition via a US Chapter 15, which led to a significant increase in the price of the bonds.
The effectiveness of Singapore as a hub for restructuring can also be seen in the turnaround of FinLync, an insolvent global fintech start-up incorporated in Singapore. We were appointed as judicial managers following an application made by one of the creditors. Despite resistance from the founding shareholders, we were able to secure a buyer for part of FinLync’s operations, ensuring business continuity and protection of jobs. At the same time, we helped to control FinLync’s rapid drain on cash and secure interim funding while the sale went through.
Many cases involve complex multinational structures
Many companies operating in Singapore are incorporated in, or have significant interests in, offshore centres such as the Cayman Islands and British Virgin Islands (BVI). Restructuring and asset recovery therefore need to take account of the complex corporate structures and connections running through this Asia-Pacific corridor. This underlines the importance of collaboration across different jurisdictions, both within the region and beyond.
Recent cases bringing together teams across Quantuma’s international network include the joint liquidation of a Cayman Islands-based investment fund. Despite contestation, we were able to secure recognition of Cayman Islands proceedings in Singapore. The results gave us crucial access to the information needed to pursue asset recovery and third-party claims.
The value of international collaboration can also be seen in the turnaround of a Singapore-listed design and construction company with operations in Malaysia, China, Thailand and Myanmar. Having been appointed as Chief Restructuring Officer, we prepared and implemented the sale and exit of the company’s state-of-the-art manufacturing facility in China. We also managed the closure of the company’s operations in Thailand, which allowed for significant cost reductions across the group. In parallel to the operational restructuring, we assumed the role of Interim Chief Financial Officer. This allowed us to implement rigorous financial controls and reporting processes, as well as pursuing financial restructuring through parallel Schemes of Arrangement in Singapore and Malaysia. To facilitate the restructuring and support ongoing operations, we sourced and structured the first ever S$62 million super-priority rescue financing facility approved by the Singapore High Court.
Many cases involve fraud and asset concealment
The complexities of insolvency and recovery can be compounded by organised efforts to conceal assets, move them offshore or dissipate them among family and friends. The advent of cryptocurrencies has made it even easier for people to cover their tracks by allowing them to use pseudonyms or private exchanges to move money around. Investigative support is therefore crucial.
In a recent case, a blockchain company engaged us to carry out an independent investigation into alleged fraud, which had resulted in the loss of US$10.5 million. The company had been introduced to a third-party agent, who promised to help raise finance by facilitating over-the-counter sales of non-fungible tokens (NFTs). However, after the tokens were transferred by the company, no funds were ever received.
We carried out a multi-pronged investigation across a number of jurisdictions including France, Singapore and the United Arab Emirates. Drawing on the latest tech-enabled techniques, our investigative team was also able to track the key individuals involved in the transaction and their assets – crypto holdings included – to help form the basis of ongoing litigation in Singapore and the Middle East.
The ‘China plus one’ strategy is taking companies into unfamiliar territories
The incoming US administration’s renewed imposition of tariffs could encourage more companies to adopt a so-called ‘China plus one’ strategy, in which some operations are moved from China to other parts of the Asia-Pacific region with lower tariff demands. Much of this strategic investment is likely to be channelled through Singapore. However, China plus one could bring investors and parent companies into new and unfamiliar markets and hence heighten the challenge of sustaining visibility over assets and exposures. A key part of Quantuma’s work for private credit funds and other international investors is therefore carrying out health checks on companies on the ground, either ahead of investment, or when there are concerns over repayment.

Here to help

Singapore is one of the 26 offices in our internationally integrated network of insolvency and restructuring teams, who work with investors, creditors and their legal representatives around the world to protect value and recover assets.

We work with clients to deal with all aspects of insolvency work, from distressed M&A to regulatory and contentious litigation and investigation. We recognise that complex situations involving multiple jurisdictions require a thorough understanding of the legal, commercial and cultural challenges at play in order to deliver the best outcome.

Our global network brings together both the people on the ground and the international connectivity to manage complex cross-border assignments. Our hands-on approach and ability to collaborate closely across different jurisdictions greatly enhances the likelihood of success for our clients.

All our fees are tailored to the nature and complexity of the assignment. In addition to retainers, we can often offer flexible performance-related fee structures, including equity arrangements and milestone payments.

If you would like to discuss any of the issues raised in this article or find out how we can help you or your clients to trace and reclaim missing assets, please get in touch.