Recognition of China Bankruptcy Reorganisation Proceedings under Singapore’s Insolvency Regime

Introduction

Singapore has established a role as a regional restructuring and insolvency hub, buoyed by a strong framework for the recognition and support of foreign proceedings. One of the most closely-watched issues in this regard is the relationship between the insolvency and restructuring regimes of the People’s Republic of China (“PRC“) and Singapore, in light of the strong economic ties between Singapore and cross-border businesses operating from PRC, and the fact that there had been few opportunities for the Singapore courts to consider the recognition of proceedings commenced under PRC insolvency law.

In Re King & Wood Mallesons and other matters [2025] SGHC 67, the Singapore High Court (“Court“) issued its reported judgment for one of the first few applications for recognition and reliefs under the UNCITRAL Model Law of Cross-Border Insolvency (“Model Law“), as adopted in Singapore by way of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA“), in respect of insolvency proceedings commenced under PRC insolvency law. Here, the Court granted orders recognising the PRC bankruptcy reorganisation proceedings as a “foreign main proceeding”, finding that the proceedings fulfilled the requirements under the IRDA. The Court also recognised the reorganisation administrators and granted them reliefs to seek information and documents relating to the companies’ property, including inquiring with the directors of the companies’ subsidiaries on the affairs and business of the subsidiaries.

The applicant administrators were represented by Sim Kwan Kiat, Ho Zi Wei, and Foung Han Peow of Rajah & Tann Singapore LLP. Ho Zi Wei successfully argued the matter before the Court.

Brief Facts

The three PRC companies which were the subject of the applications were JDNI, XHSS and YCHC (collectively, the “Delong Companies“). They belonged to the Delong Group, a stainless-steel enterprise located in PRC. The applicant (“Applicant“) is one of the largest law firms in PRC which takes up appointments as bankruptcy reorganisation administrators to rehabilitate and restructure PRC companies that are insolvent.

On 1 August 2024, the PRC People’s Court of Xiangshui County, Jiangsu Province (“PRC Court“) had ordered that JDNI and XHSS be placed under reorganisation and appointed the Applicant as the reorganisation administrator. Following an application from the Applicant, the PRC Court ordered, among others, the consolidation of JDNI with 27 other related companies (including XHSS and YCHC) for the purpose of reorganising the Delong Group.

In the course of administering the affairs of the Delong Group, the Applicant discovered several questionable transactions involving the Delong Companies’ assets in Singapore, specifically involving the shares held by XHSS in two Singapore companies (collectively, the “Singapore Subsidiaries“). The Applicant initiated the present applications before the Singapore courts, seeking recognition of the PRC reorganisation proceedings and recognition of its appointment as the reorganisation administrator of the Delong Companies. This was to facilitate, among other purposes:

1. The ascertainment and control of the Delong Companies’ assets in Singapore to aid the PRC reorganisation proceedings;

2. The ascertainment of the Delong Companies’ assets in Singapore and the value of such assets by investigating and reviewing the books and records of the Singapore Subsidiaries; and

3. The examination of the directors and officers of the Singapore Subsidiaries and other persons with relevant information and knowledge of the affairs and business of the Delong Companies in Singapore.

Holding of the Court

The Court granted the orders sought in the applications, recognising the PRC reorganisation proceedings as a “foreign main proceeding” under Art 17(2)(a) of the Model Law. The Court also recognised the Applicant as the reorganisation administrator of the Delong Companies and granted the additional reliefs sought.

Recognition of PRC Reorganisation Proceedings in Singapore

The Court considered the principles behind the PRC consolidation mechanism, and found that the PRC reorganisation proceedings qualified as a “foreign proceeding” under the Model Law:

1. On a consideration of the objectives and workings of the PRC reorganisation proceedings, they constituted a collective proceeding;

2. The PRC reorganisation proceedings constituted a judicial proceeding in a foreign State as they were commenced and supervised by a judicial body, i.e. the PRC Court;

3. The PRC reorganisation proceedings were conducted under a law relating to insolvency or adjustment of debt, i.e. the PRC bankruptcy law;

4. The property and affairs of the Delong Companies were subject to the control or supervision by the PRC Court; and

5. The PRC reorganisation proceedings sought to reorganise the Delong Group as a unified entity.

The Court was assisted by foreign legal expert opinion, which opined that the PRC bankruptcy law allows the PRC Court to consolidate separate entities and reorganisation proceedings in certain circumstances. For the substantive consolidation of affiliate companies for bankruptcy or reorganisation, this may include circumstances where their affairs or property are highly mixed or intertwined and the cost for distinguishing the properties of each affiliate company is too high, severely jeopardising the creditors’ interests of fair repayment.

The Court also held that the PRC reorganisation proceedings constituted a “foreign main proceeding” under Art 17(2)(a) of the Model Law. The registered offices of the Delong Companies were in PRC and therefore there was a presumption that their centre of main interests (COMI) was in PRC. There were no contrary facts to rebut the presumption.

The Court granted the Applicant recognition as a “foreign representative” within the meaning of Art 2(i) of the Model Law, based on its role as the appointed reorganisation administrator of the PRC reorganisation proceedings.

Orders for Relief

The Court further granted the following reliefs sought by the Applicant:

1. An order allowing the Applicant to examine witnesses and take evidence and the delivery of information concerning the Delong Companies’ property, affairs, rights, obligations or liabilities in Singapore under Art 21(1)(d) of the Model Law; and

2. Orders entrusting the Applicant with the administration or realisation of the Delong Companies’ property in Singapore, subject to the Court’s approval for expatriation of such property out of Singapore under Art 21(1)(e) of the Model Law.

The Court reached this decision based on the following considerations:

1. The basis to examine witnesses and take evidence and the delivery of information was satisfied notwithstanding that the information sought pertained to the Singapore Subsidiaries which were not the subject companies under the bankruptcy reorganisation. The Court held that, since the shares in the Singapore Subsidiaries were the property of XHSS, information pertaining to the Singapore Subsidiaries was information concerning the property and affairs of XHSS.

2. The Applicant had shown reasonable basis for its belief that the directors and officers of the Singapore Subsidiaries could assist in obtaining such information and that the information was reasonably required.

3. The timing of the transactions and the substantial values involved (US$1 billion syndicated loan and RMB5 million in receivables) warranted the reliefs to be granted.

Concluding Words

The applications in this decision were among the first for recognition and reliefs in respect of insolvency proceedings commenced under the PRC insolvency law. The Court’s decision thus provides essential guidance to assist practitioners in this area.

The decision highlights the flexibility of Singapore’s framework for recognising and supporting foreign restructuring and insolvency proceedings. The Court was able to recognise the PRC reorganisation proceedings and was also able to grant relief to the Applicant to examine witnesses and take evidence in Singapore to support the consolidated reorganisation.

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