Singapore Court Recognises Indonesian PKPU Proceedings for the First Time

In a move that facilitates the seamless integration of cross-border insolvency proceedings between Singapore and Indonesia, Singapore’s International Commercial Court has for the first time granted recognition of Indonesian PKPU proceedings in Re PT Garuda Indonesia (Persero) Tbk [2024] SGHC(I) 1.

Given the regional proximity between Singapore and Indonesia, there are a multitude of businesses and sectors that operate in both jurisdictions. Insolvency professionals, creditors and debtors involved in insolvency proceedings in Indonesia, who wish to extend the PKPU protections to assets or claims located in Singapore, will benefit. The grant of protective relief in Singapore will assist in the implementation of a restructuring plan globally, ensuring that the debtor company is protected from adverse actions in both Singapore and Indonesia while pursuing its eventual restructuring.

Indonesia has a vibrant and lively restructuring scene. The PKPU process is well utilised as a more efficient legal option if compared to the more time-consuming informal restructuring process. There is now precedent for cross-border protections in both Singapore and Indonesia being “recognised” in the other. In the PT Pan Brothers Tbk judgment, the Indonesian court had effectively extended the stay under Singapore’s moratorium over an action commenced in Indonesia.

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Herbert Smith Freehills to act for individual defendants in US$950 million clawback case brought by FTX Bankruptcy Estate

A defendant group has appointed international law firm Herbert Smith Freehills to defend against clawback claims totalling US$950 million made by the FTX Bankruptcy Estate.

The international team advising these defendants is led by Herbert Smith Freehills Prolegis’ Director Daniel Chia in Singapore and Herbert Smith Freehills partner Peter Behmke in New York.

The defendant group comprises individuals and an executive associated with Mirana Corp. The claims allege that these defendants’ VIP status on the FTX exchange allowed them to pressure FTX employees to fulfil withdrawal requests in advance of the bankruptcy filing in preference to other customers.

“This is a fast-developing aspect of bankruptcy law as it applies to cryptocurrency structures, companies and customers,” said Mr. Behmke. “While different classes of investors and creditors are clearly understood in traditional bankruptcy proceedings, the speed and global digital structure of the cryptocurrency industry, the as yet undefined nature of cryptocurrency as an asset class, and the use of computer algorithms to allegedly prefer one class of creditors over another add additional complexity to this case.”

The case is FTX Trading Ltd., 22-11068, in the US Bankruptcy Court for the District of Delaware.

Daniel Chia
Daniel Chia
Director, Singapore
+65 68121363
Jonathan Tang
Jonathan Tang
Director, Singapore
+65 68121365

Appeal Court clarifies that solvent foreign liquidators may be recognised in Singapore as “Foreign Proceedings” under the model law

Singapore’s highest court has definitively held that foreign insolvency, restructuring or liquidation proceedings concerning solvent companies should be recognised in Singapore (Re Ascentra Holdings, Inc (in official liquidation) v SPGK Pte Ltd [2023] SGCA 32), overturning a first instance decision taking the contrary view.

The Singapore Court of Appeal accepted the first appellant’s (“Ascentra“) submission that voluntary liquidation is a “foreign proceeding” under the UNCITRAL Model Law on Cross-Border Insolvency (“Model Law“) adopted by Singapore through the Third Schedule of the Insolvency, Restructuring and Dissolution Act 2018 (“Act“). 

In doing so, the Court followed developed consensus also reflected in recent US Bankruptcy Court (Southern District of New York) authorities, and recognised that in the context of liquidations, there is value to a co-ordinated approach to the liquidation of companies with transnational operations irrespective of the solvency of the company in question.

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