Singapore - A Model Law Jurisdiction - Part 1 - The turnaround decision in Re Ascentra Holdings Inc

Solvent Liquidations can be recognised as foreign main proceedings.

April 08, 2024

In 2017, Singapore adopted the UNCITRAL Model Law on Cross-Border Insolvency (Singapore Model Law), to aid in the recognition of, and assistance to, foreign insolvency proceedings and insolvency office holders. 

The Singapore Courts have always strived, in interpreting and applying the Singapore Model Law, to advance the goal of modified universalism and uphold the principle of international comity. Two landmark decisions released over the last 6 months demonstrate this more clearly than ever. 

In Part 1 of this two-part blog series, we discuss the original position under the Singapore Model Law in relation to the recognition of foreign proceedings and the Court of Appeal’s decision in Re Ascentra Holdings Inc. And in Part 2, we will consider the decision in Re PT Garuda.


The original exceptions 

Prior to 18 October 2023, there were two exceptions under the Singapore Model Law, to the recognition of foreign proceedings:

  1. First, solvent liquidations could not be recognised as foreign main proceedings, because Article 2(h) of the SG Model law requires that the proceedings in respect of which recognition is sought must relate to “insolvency” or the “adjustment of debt”.
  2. Second, the Courts could refuse to recognise a foreign restructuring or insolvency proceeding on the ground that recognition would be "contrary to the public policy of Singapore" (Article 6 of the SG Model Law). This was thought to be a lower threshold than that under the original UNCITRAL Model Law, which refers to an action which is "manifestly contrary" to the public policy of the state. 

Important developments in the law have taken place in respect of both these exceptions. 

Re Ascentra 

On 18 October 2023, the Court of Appeal released its landmark decision in Ascentra Holdings, Inc v SPGK Pte Ltd [2023] SGHC 82. It overturned the first instance decision of the Singapore High Court and confirmed that solvent official liquidations can be recognised as foreign main proceedings under the SG Model Law. 

The decision was made in the context of the voluntary winding-up of a solvent company domiciled in the Cayman Islands and the key issue was the interpretation of Articles 17(1) and 2(h) of the SG Model law. 

In brief, Article 17(1) of the SG Model Law sets out the circumstances in which a proceeding must be recognised. One of the conditions for recognition is that the proceeding is “a foreign proceeding within the meaning of Article 2(h)”, i.e.  “a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, under a law relating to insolvency or adjustment of debt in which proceeding the property and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation”.

In the first instance judgment by the Singapore High Court, it was held that a solvent liquidation would not fall within this definition because the ordinary meaning of the words “law relating to insolvency” would encompass only proceedings invoked in circumstances where a company is insolvent or in severe financial distress. The Singapore High Court chose to follow the approach taken by the English High Court in Re Sturgeon Central Asia Balanced Fund Ltd (in liquidation) Carter v Bailey and another (as foreign representatives of Sturgeon Central Asia Balanced Fund Ltd) [2020] EWHC 123, rather than various decisions made by the Australian and US Courts. 

The Court of Appeal disagreed. Instead, it held that the requirements of Article 2(h) would be met if the law or the relevant part of the law under which the relevant proceeding is conducted includes provisions dealing with the insolvency of the company or the adjustment of its debts. Additionally, it would typically not matter if the company involved in the relevant proceeding is not insolvent or experiencing significant financial hardship.

The Court of Appeal reasoned as follows:

  1. Neither the UNCITRAL Model Law nor the SG Model Law include an express requirement that a company must be insolvent or in severe financial distress to fall within the ambit of a foreign proceeding.  
  2. The interpretation of Article 2(h) of the SG Model Law to include proceedings relating to solvent companies is consistent with other jurisdictions such as the US, Australia, and New Zealand which each recognise proceedings involving solvent companies as foreign main proceedings. The SG Model Law ought to be interpreted in a way which aligns with other jurisdictions, to promote consistency in its cross-jurisdictional application (a nod to modified universalism). 
  3. The inclusion of the words “or adjustment of debt” in Art 2(h) of the SG Model Law may be construed as an attempt by Parliament to align the SG Model Law with the corresponding provisions of the US Bankruptcy Code and enable the Singapore courts to recognise proceedings in foreign jurisdictions that are akin to schemes of arrangement commenced under Singapore law and/or reorganisations commenced under the US Bankruptcy Code. 
  4. While the primary purpose of the UNCITRAL Model Law and indeed the SG Model Law is to prescribe a co-ordinated regime for proceedings involving insolvent companies, the extension of the operation of the UNCITRAL Model Law to solvent companies would not undermine (and in fact, would further) this purpose. For example, regardless of a company’s solvency status, where a proceeding involves all the creditors of a company and all its assets and liabilities for the purposes of reorganisation and liquidation, cooperation and coordination were important, and the rationale for recognition of foreign proceedings would still be applicable.

The Court of Appeal accordingly allowed the application for the recognition of the voluntary winding up proceedings.


Meiyen Tan, Director, Norton Rose Fulbright Singapore

Hannah Alysha, Associate Director, Norton Rose Fulbright Singapore

Jih Shenn Foo, Trainee Solicitor, Norton Rose Fulbright Singapore