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Court Rules on Cross-Border Insolvency

In a case which raised novel issues relating to cross-border insolvency, an alleged creditor of a troubled Singapore-registered company has convinced the High Court that a stay on court proceedings in London should be lifted to the extent of enabling it to proceed with an attempt to resolve the dispute through arbitration.

The Singaporean company was undergoing a process of insolvency and the High Court of Singapore had appointed interim judicial managers to conduct its affairs. The alleged creditor had put in train arbitration proceedings against the company and another within the same group.

At the managers’ behest, the High Court in London had recognised the Singapore insolvency process as foreign main proceedings within the meaning of the Cross-Border Insolvency Regulations 2006. The Court went on to stay any individual actions or proceedings relating to the assets, rights, obligations or liabilities of the Singaporean company until further order of the Court.

The alleged creditor applied to the Court for a partial lifting of the stay so that it could press ahead with the arbitration process. The application was resisted by the managers, the Singaporean company and its sister company. However, in granting the application, the Court accepted that the alleged creditor had ‘entirely legitimate objectives’ in wishing to pursue the arbitration and that there were ‘considerable advantages’ to be obtained by doing so.