Singapore’s insolvency law gives bondholders a chance to chase default losses

The city state’s corporate debt market was hit by more than $1.5b worth of defaults.

Bloomberg reported that the new insolvency law could pave way for bondholders to retrieve their funds with court-appointed managers allowed to seek funding from investors unrelated to the case to pay the cost of pursuing claims, by having part of the proceeds.

“In insolvency matters, creditors including bondholders can benefit to the extent that the liquidators are able to claw back any proceeds for the bankruptcy estate,” IMF Bentham head of investment Tom Glasgow said.

Also read: Has Singapore’s insolvency bill come a little too late for Hyflux?

The Lion City’s corporate debt market was hit by more than $1.5b worth of defaults from shakeouts of oilfield contractors and shipbuilders, making many bondholders caught in such cases tap on third-party funding to chase lost monies should help recoveries.

Burford director Quentin Pak thinks that the mechanisms pushed by the newly-enacted law could likely result to a more efficient administration of bankruptcy estates whilst giving companies in financial difficulty a better chance of rehabilitation and of realizing the value of their litigation assets

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