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More firms looking to revised Act

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More distressed companies in the oil and gas, shipping and offshore marine sectors could seek protection under a new insolvency framework that is to come into effect soon.

The framework, adopting some elements of the US bankruptcy code, aims to give troubled entities greater flexibility to restructure and survive.

Firms in these ailing industries have been hit hard by the oil price rout, so a fair number are set to seek protection to restructure under the new rules, TSMP Law restructuring partner Alexander Pang said.

Sources estimated five to eight ailing firms that have either raised finance here or have creditors, operations or offices here could seek the new protection.

One possible candidate is Ezra Holdings, which sought Chapter 11 protection in the US in March given a lack of such protections here.

There is talk that the firm could apply for local protection as well, under the revised debt-restructuring laws here.

The local move would be motivated by the fact that Singapore parties not doing business in the US have little to fear in not complying with a US order.

But they will have to comply with a Singapore court order, TSMP Law joint managing director and senior counsel Thio Shen Yi said.

The amendments to the Companies Act, passed by Parliament in March, are set to take effect soon.

After that, the High Court will be able to order a moratorium in favour of a firm proposing a scheme of arrangement for debt restructuring.

The moratorium, a temporary protection barring creditors from claiming a firm's assets, will be issued automatically upon application for up to 30 days - with worldwide effect.