Singapore’s Legal and Economic Response to the COVID-19 Crisis : The Role of Insolvency Law and Corporate Workouts

The international spread of the coronavirus has forced many countries to put their economies into ‘hibernation', leading to one of the worst recessions observed in modern times. Since Singapore is not isolated from this crisis, the Government had to intervene by adopting a very ambitious package of legal and financial measures to support businesses, households and employees. Among these measures, the Government has implemented various temporary changes to the insolvency legislation, and the use of out-of-court agreements has been encouraged for debtors facing financial trouble. This article argues that, while insolvency law can play an important role in the current situation, especially in countries with efficient insolvency frameworks such as Singapore, there are some limitations associated with the use of insolvency proceedings. For this reason, the use workouts should be promoted as a way to facilitate the financial restructuring of debtors affected by the COVID-19 crisis. Besides, several factors make the use of workouts particularly feasible in Singapore. In our view, the existence of the comprehensive package of legal and fiscal responses adopted by the Singapore Government, along with the important role potentially played by insolvency law and corporate workouts, will significantly help minimise the economic impact of the COVID-19 crisis in Singapore