In our latest profile of GRIP Asia-Pacific members, Singapore’s TSMP Law Corporation talks about the major pandemic-driven changes to the country’s insolvency legislation and the impact of COVID-19 on industry – and provides some compelling insights into this award-winning boutique law firm.
Like that of many countries, Singapore’s insolvency regime has undergone major changes as a result of the COVID-19 pandemic – not least being the introduction of the omnibus insolvency legislation – the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”).
An inaugural member of the GRIP (Global Restructuring and Insolvency Professionals) network’s Asia-Pacific arm, TSMP Law Corporation, Singapore’s pre-eminent independent boutique law firm, says this omnibus insolvency legislation, which came into force on July 30, 2020, is designed to enhance measures that support debt restructuring and provide a lifeline for financially distressed businesses and individuals. It is aligned with the best practices of restructuring from around the world.
“There has been a steady and continuous focus towards better facilitation of debt restructuring while discouraging a rush to wind a company up,” says Mr Thio Shen Yi, S.C., Joint Managing Partner of TSMP. “This insolvency legislation consolidates Singapore’s corporate insolvency, personal bankruptcy and debt restructuring rules into a single statute and has been created to help strengthen Singapore’s position as an international debt restructuring hub.”
The legislation provides certain reliefs for businesses including the increase in the threshold which triggers a presumption of inability to pay debts from S$10,000 to S$15,000 in relation to the starting of corporate insolvency proceedings; and restrictions on the effect of ipso facto clauses, which means the termination of the contract only on the ground that an insolvency proceeding has been commenced against the contracting counterparty is now generally not allowed under IRDA unless the statutory exceptions are met.
Some other features of the IRDA include:
- Out-of-court judicial management, which allows a company to place itself into judicial management without a court order as long as the creditors agree to it.
- A new wrongful trading provision, which provides that criminal liability is no longer a prerequisite before civil liability can be imposed.
According to Ms Felicia Tan, a Partner at TSMP, insolvency proceedings in Singapore have been on the rise, with a relatively high volume of judicial management, scheme moratoriums and voluntary liquidations. “It’s a trend that we expect to continue this year,” she says. “And with an increased emphasis in debt restructuring via various IRDA mechanisms, insolvency mediation ought also to become more prominent as a mode of resolving disputes between stakeholders of a distressed company.”
Similar to those from other regions, Singaporean industries that have been most impacted by the pandemic include hospitality, food & beverage, retail and construction, says Mr Danny Quah, a Director at TSMP.
Adds Mr Justin Ee, a Director at TSMP: “Construction accounted for four per cent of Singapore’s GDP in 2019. It plunged to 2.7 per cent in 2020, no thanks to abrupt work stoppages, delays and disruptions during the ‘Circuit Breaker’ period*. COVID-19 has further exposed and amplified the industry’s inherent and structural efficiencies and shortcomings, with a scarcer manual workforce due to border restrictions and infections. This workforce was rendered even more inefficient with safe workplace and testing requirements, supply chain disruptions, and suspension of site work.”
Established in 1998, TSMP has 12 Partners and a team of more than 100 lawyers and support staff. The firm specialises in complex corporate disputes and transactions across multiple jurisdictions, working with blue chip multi-national corporations and banks, to high-net-worth individuals and promising start-ups across a myriad of industries.
“Broadly, we focus on high-stakes disputes, cutting-edge transactions and ground-breaking law. Our practice leaders are recognised as thought leaders in their areas of expertise,” says Mr Thio, S.C.
The firm’s restructuring and insolvency capability combines the expertise of a multi-disciplinary team, comprising experienced insolvency, corporate, construction and litigation lawyers. “We advise on cross-border restructuring and insolvency matters and act on all sides of the insolvency process,” Mr Thio, S.C. adds “We have represented liquidators, judicial managers, scheme arrangers, companies or individuals restructuring their debt obligations, ‘white knights’ and corporate rescuers.”
High-profile matters TSMP has worked on in various capacities include the award-winning billion-dollar corporate rescue of Universal Terminals, a former Hin Leong-linked asset; the S$3 billion restructuring of Hyflux, one of the largest in Singapore’s history; the corporate rescue of Citiraya Industries; the US$950 million restructuring of PT Berau Coal Energy Tbk; the HK$5 billion restructuring of Titan Petrochemical Group; the liquidation of Lehman Brothers; and restructuring of Eastman Kodak.
As a member of the GRIP Asia-Pacific arm, TSMP has a clear aim: “We want to expand our restructuring and insolvency practice and being a GRIP member enables us to forge new – and reinforce existing – business relationships with other APAC members,” says Ms Tan.
TSMP is a proudly values-driven business that stands for empowerment, gender diversity and inclusion, and the firm is committed to a three-pronged community engagement program: pro bono legal services, hands-and-feet charity events, and financial aid for causes the firm supports. Its charitable mission has three pillars: to help children (especially at-risk youth), old folks and foreign workers in Singapore. The firm was named a Champion of Good in 2017, 2018 and 2020, and Asia-Pacific Pro Bono Firm of the Year in the Asialaw Asia-Pacific Legal Practice Awards. In 2018, TSMP became the first law firm to receive the President’s Volunteerism & Philanthropy Award.
TSMP’s Joint Managing Partner, Ms Stefanie Yuen Thio has also recently set up SG Her Empowerment (“SHE”), a new charity to help victims of online and sexual harm.
*From April 7, 2020, Singapore entered the ‘Circuit Breaker’ period in order to pre-empt escalating COVID-19 infections. During this time, Singaporeans were advised to stay home as much as possible. In tandem with the circuit breaker, a new law – the COVID-19 (Temporary Measures) Act 2020 was passed in Parliament on April 7.