Singapore restructuring regime: foreign companies establishing eligibility for moratorium protection

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In Re PT MNC Investama TBK [2020] SGHC 149, the Singapore High Court provided guidance as to what is sufficient for a foreign company to establish standing to avail itself to the Singapore restructuring regime. Specifically, the factors expressed in the "substantial connection" test under the IRDAare non-exhaustive and courts will consider other factors involving "some permanence" to permit foreign companies to restructure in Singapore.


Establishing a "substantial connection"

The IRDA requires a foreign company to show a "substantial connection" with Singapore in order to be eligible to seek moratorium protection in respect of a scheme of arrangement. In relation to substantial connection, the IRDA sets out matters the court may rely on to support a determination that a foreign company has a substantial connection with Singapore. The factors listed are:2

a) Singapore is the centre of main interests of the company;

b) the company is carrying on business in Singapore or has a place of business in Singapore;

c) the company is a foreign company that is registered under the Companies Act;

d) the company has substantial assets in Singapore;

e) the company has chosen Singapore law as the law governing a loan or other transaction, or the resolution of disputes arising out of or in connection with a loan or other transaction; and

f) the company has submitted to the jurisdiction of the Singapore courts for the resolution of one or more disputes relating to a loan or other transaction.


In PT MNC, none of the above factors explicitly supported the existence of a substantial connection of the company with Singapore. PT MNC’s centre of main interests was not in Singapore, and it did not carry on business, register as a foreign company, or have a place of business or substantial assets in Singapore. Further, none of PT MNC’s debt was governed by Singapore law, nor had it submitted to the Singapore courts or invoked Singapore law in any dispute. However, the company was the issuer of notes that were listed on the Singapore stock exchange. The company made a section 211B moratorium application under the Companies Act (now section 64 of the IRDA) in respect of the restructuring of its notes through a scheme of arrangement.

The court decided that the listing was sufficient to establish a substantial connection with Singapore. The court reasoned that the expressed factors are only a starting point and are not meant to be exhaustive or definitive. Further, the court elaborated that a substantial connection "clearly encompass the presence of business activities, control and assets in Singapore . . . . [which] involve some permanence or permanent effect, and exclude activities of a merely transient nature".3 To this end, the court decided that PT MNC’s securities being traded on the Singapore stock exchange and PT MNC being thus subject to Singapore laws and regulations was "akin to substantial business activity" that was not merely transient and was a strong indicator of a substantial connection with Singapore.4


Practical implications

The court noted that there are other circumstances that may constitute a substantial connection which are for future cases to test. In particular, the court mentioned, without deciding, the question of whether a retainer paid by a company to Singapore lawyers would be sufficient to establish a substantial connection. The court noted that in Berau Capital5, the Singapore company established standing in the US where it had, among other things, deposited money to retain New York lawyers. The court queried whether, in similar circumstances, a Singapore court would follow the approach of US bankruptcy courts and find that a foreign company had a substantial connection with Singapore.


1 Insolvency, Restructuring and Dissolution Act 2018.
2 Section 246(3). Formerly section 351(2A) of the Companies Act (the "Companies Act").
PT MNC at 13.
In re Berau Capital Resources Pte Ltd 540 BR80 (Bankr SDNY 2015).



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