Distressed companies seeking judicial management in Singapore would face a tougher rescue test under reforms outlined by Minister for Law Edwin Tong, The Straits Times reported, as creditors weigh recovery against liquidation.
Applicants would have to explain how the court-supervised process could rehabilitate a company and deliver tangible benefits compared with winding it up immediately. The Straits Times reported that the proposals would also call for an explanation when judicial management ends in liquidation and would usually prevent the same practitioner from overseeing that liquidation.
Judicial management puts a court-appointed manager in control of a distressed company while a moratorium is in place. Introduced in 1987, the process can be used to keep a business operating, secure a restructuring agreement or recover more from its assets than a winding up would yield, according to a government-appointed committee’s report.
The committee reviewed 99 cases from applications filed between 2017 and 2021. It classified 43 as meeting at least one existing legal objective, a measure that includes asset recovery rather than business rescue alone. Another 25 were unsuccessful, 23 were dismissed or withdrawn, and eight lacked enough information for a determination or remained ongoing.
The committee said combining rescue with asset recovery had made the purpose of judicial management less clear and weakened creditor support. It argued that a clearer rescue route could help viable distressed companies.
A separate recommendation concerns plans approved by a court despite opposition from a class of creditors. The committee proposed removing specific conditions requiring support from a majority in number of affected creditors representing at least three-fourths of their claims’ value. Courts would still assess whether a plan treats dissenting classes fairly. The committee also proposed applying the mechanism to shareholders in appropriate cases and letting them preserve an interest by contributing fresh value.
For cases spanning borders, the committee recommended adopting two laws from the United Nations Commission on International Trade Law (UNCITRAL): the Model Law on Enterprise Group Insolvency and the Model Law on Recognition and Enforcement of Insolvency-Related Judgments. Singapore adopted a separate UNCITRAL model law on cross-border insolvency in 2017.
The Ministry of Law said May 14 that it broadly accepted the committee’s recommendations and would refine them during implementation. The Straits Times reported that the amendment bill is expected to receive its first reading in Parliament later in 2026 or early 2027.
