MinLaw to Implement Recommendations to Enhance Singapore’s Corporate Restructuring and Insolvency Regime

Executive Summary

On 14 May 2026, the Ministry of Law (“MinLaw“) announced that it has reviewed and broadly accepted the recommendations of the Committee to Enhance Singapore’s Corporate Restructuring and Insolvency Regime (“Committee“).

The Committee’s recommendations arise from its “Report of the Committee to Enhance Singapore’s Corporate Restructuring and Insolvency Regime 2025” (“Report“), published on 11 March 2025, detailing its views, perspectives and recommendations on proposed amendments to further enhance Singapore’s corporate debt restructuring and insolvency framework. These recommendations span four broad categories: (i) strengthening the judicial management regime; (ii) refining the cross-class cramdown in schemes of arrangements; (iii) refining the framework and tools for efficient debt restructurings; and (iv) adopting the UNCITRAL Model Law on Enterprise Group Insolvency and the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments.

Following from its consultation from 11 March 2025 to 8 April 2025, MinLaw has confirmed that, at the implementation phase, it will take into account respondents’ various suggestions on implementing the recommendations and on how to adapt or refine them to achieve the underlying policy objectives.

This Update delves into further detail on some of the key recommendations that have been accepted and their implications for stakeholders.

Strengthening the Judicial Management (“JM”) Regime

Focus on Restructuring and Turnaround (Not Recovery)

In the JM regime, a judicial manager is appointed by the court to take possession of and administer a debtor’s operations and assets in place of its management. A moratorium is in place while the judicial manager devises a proposal to achieve one of the statutory objectives of JM for the creditors’ approval. The debtor exits the JM regime where the approved proposal is achieved, or where the statutory objectives can no longer be achieved. These objectives include: (i) the survival of the company, or the whole or part of its undertaking, as a going concern (“turnaround function“); (ii) the approval of a scheme of arrangement (“SOA“) (“restructuring function“); or (iii) a more advantageous realisation of the company’s assets or property than on a winding up (“recovery function“). For more information, please refer to our March 2025 NewsBytes article titled “MinLaw Consults on Committee’s Recommendations to Enhance Singapore’s Corporate Restructuring and Insolvency Regime”.

The Committee recommended reconceptualising the JM regime to emphasise the restructuring and turnaround functions. It observed that the JM regime has been increasingly useful for the restructuring and turnaround of debtors, but that its value may be eroded if there continue to be divergent purposes for the regime, i.e. having both the restructuring / turnaround functions and the recovery function, which will contribute to a lack of clarity in the intended outcome and negatively impact creditor support.

Flexible Remuneration to Incorporate Success Fees

The Committee also recommended that the judicial manager’s remuneration be based on a multi-stage model that allows flexibility to better align such remuneration with successful outcomes, and to include a success fee component. This will best serve the interests of all parties by achieving greater alignment of interests and facilitating the faster resolution of JM cases, which is critical to preserve the debtor’s residual value, minimise ongoing costs and yield greater returns to shareholders. In particular, one option proposed by the Committee is to:

1. Time-costing initially: Allow for time costs-based remuneration during an initial period for the judicial manager to get up to speed, as this method is more appropriate where there is a high level of uncertainty.

2. Success fees thereafter: Thereafter, link remuneration to the achievement of the proposals and objectives of the JM, as this method will better align the stakeholders and the judicial manager on the mutually agreed intended outcome of the JM proceedings and their respective interests.

3. Other conditions: Importantly, the Committee was of the view that: (i) it would not be commercially desirable for the authorities to prescribe a specific remuneration figure, percentage or formula; and (ii) the conditions of success must be mutually agreed upon between the judicial manager and the creditors.

Retain Dual Standing for Creditors and Debtor to Apply for JM

Further, the Committee recommended that both creditors and the debtor should continue to have standing to apply to the court to place the debtor in JM. This would continue to provide the debtor with the added option to seek to restructure or turnaround its business via the reconceptualised JM regime, in addition to the SOA regime. Maintaining dual standing as such recognises that: (i) the JM is a neutral, officer-led proceeding (the judicial manager is an officer of the court), which should operate in the same manner regardless of the applicant’s identity; and (ii) the value propositions and features of the JM regime differ from the SOA regime, with debtors continuing to benefit from having an added option to place the debtor into JM in appropriate circumstances.

Retain Clawback Ability for Judicial Managers 

In addition, the Committee recommended that, in the reconceptualised JM regime, the judicial manager should continue to have the ability to pursue clawback actions to allow recovery of the debtor’s assets. This ensures that clawback actions can be deployed in JM (not just in winding up) to effect a successful turnaround and preserve value, and that creditors can be incentivised to support the restructuring plan provided there is a good chance of a successful clawback action. While allowing clawback actions to be pursued within JM could delay proceedings, the Committee noted that: (i) the creditors hold the power to decide on the judicial manager’s proposals including whether to commence clawback actions; (ii) the clawback action must support the broader restructuring or turnaround plan; and (iii) the judicial manager must establish that the debtor was factually insolvent at the time, or as a result, of the transaction (if required by legislation).

Refining the Cross-Class Cramdown in SOAs

Removing Majority Threshold 

The cross-class cramdown is a mechanism that prevents a minority of creditors in a dissenting class from vetoing a SOA simply because they belong in a separate class, provided they are treated fairly under the proposed SOA. The court has the power to approve the compromise or arrangement despite the dissenting class, provided various threshold requirements are met. 

The Committee recommended that these threshold requirements be refined to remove conditions requiring a majority in number of creditors (representing three-fourths in value of creditors meant to be bound by the proposed SOA) to vote in favour of the restructuring plan. This removes the high threshold which otherwise deters the putting together of a cross-class cramdown plan and makes the mechanism more functional.

Including Shareholders Where Appropriate 

The Committee also recommended that: (i) the scope of the cross-class cramdown provisions be expanded to encompass shareholders (not just creditors) in appropriate circumstances; and (ii) shareholders be given an opportunity to retain an interest in the debtor if they contribute new value to the debtor, as this could incentivise them to continue their initial support for the debtor. This reflects the economic reality of the debtor’s capital structure in a financially distressed situation and ensures that shareholders with no economic interest in the debtor cannot hold out against a restructuring plan.

Refining the Framework and Tools for Efficient Debt Restructuring

Streamlining Processes for Property Disposal and Share Issuance 

Currently under the Companies Act 1967, the company’s approval in a general meeting is required when a company seeks to dispose of property or issue shares in connection with a restructuring. This creates uncertainty in a restructuring plan that the creditors have agreed to, provides shareholders with de facto veto powers in an insolvency situation (when the creditors’ interests come to the fore), and can impede a quick and successful conclusion.

As such, the Committee recommended that the process for disposing of the company’s undertaking or property, and issuing new shares, be streamlined in a JM or a SOA.

Appointment of Restructuring Officer for SOA 

The Committee also recommended that: (i) the court be provided with the discretion to assess and appoint a neutral third-party individual as a restructuring officer to assist with a restructuring under a SOA; (ii) such appointment should not be mandatory, but be targeted at cases where it would be useful or appropriate; and (iii) the court should have the flexibility to limit or designate the restructuring officer’s functions, e.g. to act as a monitor, to provide business expertise, or to take on the functions typically performed by that neutral individual.

Adopting UNCITRAL Model Laws Relating to Insolvency

The UNCITRAL Model Law on Enterprise Group Insolvency (“MLEGI“) aims to facilitate the restructuring of the whole of a business enterprise with multinational holdings or the sale of the business as a going concern, through group insolvency solutions that seek to enhance the overall combined value of two or more group members through a restructuring, sale of business or liquidation. In turn, the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments (“MLRIJ“) aims to provide a framework for the recognition and enforcement of foreign insolvency-related judgments, given the uncertainty regarding the application of the UNCITRAL Model Law on Cross-Border Insolvency (“MLCBI“) (the main global instrument for cross-border insolvency) to the enforcement of such judgments.

As such, the Committee recommended that Singapore should adopt: (i) the MLEGI, as it will provide Singapore with an opportunity to coordinate the restructuring of enterprise groups, particularly for proceedings heard in the Singapore International Commercial Court; and (ii) the MLRIJ, as it will provide a bespoke and tailored regime for the recognition of foreign insolvency-related judgments, providing clear guidance and certainty to foreign users seeking to enforce such judgments in Singapore. This will further strengthen Singapore’s ability to deal with international, cross-border restructuring and insolvency matters, complement its earlier adoption of the MLCBI, and position it as one of the first States to implement both Model Laws, thereby demonstrating its commitment to mutual cooperation and international best practices in this area.

Key Insights

The Committee’s recommendations, if implemented as proposed, will elevate the present JM regime significantly. Critically, the reconceptualised JM regime with its refined focus on restructuring and turnaround, and the introduction of success fee-based remuneration models for judicial managers, will make the regime more effective and targeted in achieving the fundamental goal of value maximisation for the debtor company. Taken together with the continued clawback powers for the judicial manager and the debtor’s continued standing to apply for JM, this further strengthens the regime as a realistic and viable alternative to a SOA or the terminal process of winding up, in an appropriate case. Judicial managers in particular should take note of the mindset shift where they will be expected to act with greater urgency and purpose, with their remuneration increasingly tied to demonstrable outcomes.

Of note as well are the proposed refinements to the cross-class cramdown mechanism in SOAs to make such plans more feasible, providing creditors in supportive classes with greater confidence that holdout behaviour by a dissenting minority can be overcome. Creditors may also welcome the potential appointment of a restructuring officer to assist with a SOA; notwithstanding the additional costs and potential delays arising from such appointment, it would lend greater oversight, expertise, assistance and transparency to the process, which may prove pivotal in contested situations.

For shareholders, however, the proposed reforms signal a more constrained role in distressed scenarios, as reflected in the streamlining of the processes for property disposal and share issuance, and the expansion of the cross-class cramdown mechanism to encompass shareholders where appropriate. This reflects the economic reality that, in insolvency, equity interests are often subordinate to creditor claims, although the Committee has sensibly preserved an incentive for shareholders to contribute new value if they wish to retain an interest in the restructured entity.

Finally, for enterprise groups and multinational debtors, the adoption of the MLEGI and the MLRIJ positions Singapore as an increasingly attractive hub for coordinating complex cross-border restructurings. These instruments will enhance the ability of stakeholders to pursue group-wide solutions and enforce insolvency-related judgments across jurisdictions with the requisite frameworks and certainty of process.

Taken together, these recommendations represent a pragmatic and well-calibrated evolution of Singapore’s corporate restructuring and insolvency framework, and stakeholders would be well-advised to engage proactively with the implementation process to ensure that their interests are adequately considered.

If you have any queries on the above, please reach out to our team set out on this page.

For regional Restructuring & Insolvency matters, please see Rajah & Tann Asia’s Regional Restructuring & Insolvency Practice for more information.