E-briefing: Recognition of Foreign Bankruptcy Orders by the Singapore High Court
RECOGNITION OF FOREIGN BANKRUPTCY ORDERS BY THE SINGAPORE HIGH COURT
Henice Tombak Simanjuntak and others v Paulus Tannos and others  SGHC 216
1. Pursuant to the Companies (Amendment) Act 2017, the UNCITRAL Model Law on Cross-Border Insolvency (“Model Law”) was implemented in Singapore to facilitate cross-border corporate insolvency matters including recognition of foreign proceedings if certain stipulated conditions are met.
2. However, the Model Law as enacted in Singapore does not extend to personal bankruptcy matters.
3. In the recent case of Henice Tombak Simanjuntak and others v Paulus Tannos and others  SGHC 216, the Singapore High Court was invited to consider the recognition of foreign personal bankruptcy orders.
4. In this case, the Singapore High Court elaborated on the common law test to be applied by the Singapore Courts in deciding whether to recognise foreign personal bankruptcy orders and granted full recognition of the foreign personal bankruptcy orders under common law.
5. Bankruptcy and insolvency proceedings were commenced in Indonesia and culminated in the following orders:
- A bankruptcy order against the Respondents.
- The appointment of an additional receiver and administrator.
- A moratorium on debt repayment (alternatively termed a suspension of debt payment obligations), the Penundaan Kewajiban Pembarayan Utaang (“PKPU”).
(collectively, the “Indonesian Bankruptcy Orders”)
6. The Applicants, who are the receivers and administrators appointed under Indonesian law, had successfully applied to the Singapore Courts for recognition of the Indonesian Bankruptcy Orders. The Applicants were accordingly empowered to administer, realise and distribute the Respondents’ property in Singapore.
7. The Respondents subsequently applied to set aside the orders granting recognition of the Indonesian Bankruptcy Orders and assistance to the Applicants.
Decision of Singapore High Court
8. The Court considered the recognition of the Indonesian Bankruptcy Orders on the basis of common law as the Model Law enacted in Singapore does not extend to personal bankruptcy orders. In any event, the Indonesian Bankruptcy Orders predated the Model Law coming into force.
9. The Singapore High Court took the opportunity to set out the requirements for recognition of a foreign bankruptcy order under common law, as follows:
- First, the foreign bankruptcy order is made by a court of competent jurisdiction.
- Second, that court must have jurisdiction on the basis of: (i) the debtor’s domicile or residence; or (ii) submission by the debtor to the jurisdiction of the court.
- Third, the foreign bankruptcy order must be final and conclusive.
- Fourth, no defences to recognition apply.
10. The Court also highlighted that the recognition of foreign appointment of insolvency practitioners would raise unique issues such as the requirement of the court’s assistance in dealing with assets, monies and information, and the potential extensive effects on third parties, which go beyond what is entailed in the enforcement of foreign money judgments
11. As such, the Court held that it may be appropriate for the court to impose restrictions or requirements on, amongst others, the expatriation or taking possession of certain assets.
12. On the facts of this case, the Court held that:
- The Indonesian Court had jurisdiction on the basis of submission by the Respondents through having taken a step in the proceedings in that they have appointed legal counsel to attend various hearings and other meetings.
- The Indonesian Bankruptcy Orders were final and conclusive, as the Respondents had failed to satisfy the Court that there was a substantive appeal underway.
- The Respondents had also failed to prove their alleged defences against the recognition of the Indonesian Bankruptcy Orders.
13. In view of the above, the Court granted full recognition to the Indonesian Bankruptcy Orders. The Applicants were empowered to administer the Respondents’ property in Singapore, save that leave of court should be obtained in respect of transfers of real or immovable property and for the repatriation of any assets out of Singapore.
14. This decision continues the trend of the Singapore Courts to clarify the laws with regard to recognition of foreign orders involving both foreign corporate insolvency and foreign personal bankruptcy proceedings.
15. In addition, given the increasing number of insolvency matters being cross-border in nature due to debtors owing properties across multiple jurisdictions, it is strategically important for creditors, insolvency practitioners and debtors to be aware of the requirements under which foreign insolvency orders will be recognised in different jurisdictions (in this case, Singapore).
NOTE: The content of this article is for general information only and does not constitute any form of legal advice. Please seek specific legal advice regarding your specific circumstances.
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