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Restructuring and Insolvency Regimes in South East Asia

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Restructuring and Insolvency Regimes in South East Asia © Rajah & Tann Singapore LLP 1 CONTENTS INTRODUCTION 3 PART I – Cambodia, Myanmar, Laos, Philippines and Vietnam 4 PART II – Thailand, Malaysia, Indonesia and Singapore 16 KEY CONTACTS 24 OUR REGIONAL OFFICES 25 DISCLAIMER 26 INTRODUCTION As business and commerce becomes increasingly cross-border in nature, it is important for businesses to have knowledge of restructuring and insolvency regimes of foreign jurisdictions. This is particularly relevant in the Southeast Asia region, given the close connection and links amongst the Southeast Asian states. In this publication, we take a broad look at the key areas of interest in the restructuring and insolvency regimes across the region. The comparative overview covers various differences and similarities in the respective restructuring and insolvency frameworks in these jurisdictions. Rajah & Tann Asia, as a regional network of law firms, has an established presence across Southeast Asia. Our regional offices have the requisite restructuring and insolvency expertise to assist with your queries and restructuring and insolvency needs across these jurisdictions. This publication is up to date as of September 2020. © Rajah & Tann Asia 3 PART I – Cambodia, Myanmar, Laos, Philippines and Vietnam Areas Cambodia Laos Myanmar Philippines Vietnam Rehabilitation A plan of compromise Upon the Court Rehabilitation Court-supervised Court-convened and can be proposed by accepting the petition process can be voluntary rehabilitation Creditors’ Meeting Restructuring the debtor, the or request for initiated (i) voluntarily (court administration). (court administration). Regime administrator or a adjudication and by the company; (ii) creditor (court declaration of by a secured creditor Court-supervised administration). bankruptcy, the debtor who holds security involuntary may apply for Court over all or majority of rehabilitation (court A plan of compromise sanctioned mediation. the property of the administration). needs to be Mediation is kept company; and (iii) by Pre-negotiated submitted to the confidential. an order of the Court. rehabilitation (court Court no more than administration). seven days before The Asset Supervision Committee or a the first creditors’ Informal restructuring creditor representing rehabilitation plan meeting. ¼ of the total debt (debtor in Creditors vote on a may call a creditor’s possession). plan of compromise meeting. The creditor’s meeting at the creditors’ shall consider and, if meeting after an approved, propose to insolvency the Court the proceeding is open. rehabilitation plan for consideration. A plan of compromise can only be implemented if © Rajah & Tann Asia 4 Areas Cambodia Laos Myanmar Philippines Vietnam adopted by the creditors. Eligible All debtors with the All enterprises which All companies Sole proprietorships Enterprises and Companies exception of regulated are insolvent, and incorporated in registered with the cooperatives based in entities under the Law which are located or Myanmar. Department of Trade the territory of Vietnam on Banking, Law on conduct business in and Industry (DTI), Non-Governmental the Lao People’s partnerships Securities, and Law Democratic Republic, registered with the on Insurance, unless regardless of whether Securities and there is a provision their activities are Exchange under any of these conducted by Commission (SEC), laws allowing for it. themselves or by and corporations representative(s). organized and existing under Philippine law. o Banks, insurance companies, pre- need companies and national and local government agencies or units are not covered o Government financial institutions other than banks and government- owned or- controlled corporations are covered unless © Rajah & Tann Asia 5 Areas Cambodia Laos Myanmar Philippines Vietnam their charters provide otherwise Scope of A stay is imposed by The law states that the During the Rescue For Court-supervised Court-convened Moratorium the Court once the Court may impose Stage of the rehabilitation plans – Creditors’ Meeting – insolvency proceeding temporary measures rehabilitation process, The moratorium (i) Includes the is open and shall be to protect the debtor. the rehabilitation suspends all actions suspension of (i) civil effective from the We understand this to manager has a period or proceedings, in execution pertaining to beginning until the end include a moratorium. of three months to court or otherwise, for assets and civil cases of the insolvency work out a viable the enforcement of related to the financial proceeding. No action, The Asset Supervision rehabilitation plan and claims against the obligations in which proceedings, Committee as part of present it before a debtor; (ii) suspends the insolvent entity is a its supervision could execution of any kind meeting of the all actions to enforce litigant, and (ii) by or on behalf of any propose to the Court company’s creditors any judgment, competent authorities creditor may be to decide on the use for approval. attachment or other from handling of necessary and commenced or provisional remedies collateral for secured continued against the urgent measures on a During the against the debtor; (iii) debts of the insolvent temporary basis to aforementioned debtor and the assets prohibits the debtor entity. of the estate. protect the assets of period, a moratorium from selling, the debtor enterprise. is imposed on any encumbering, One exception to the actions or legal transferring or stay is when it is in proceedings (including disposing in any the best interest of arbitration) being manner any of its the estate, the carried out against the properties except in administrator may company, or actions to the ordinary course of enforce any security allow a creditor to business; and (iv) against the company. foreclose a security prohibits the debtor No step can be taken from making any interest on an asset. without the leave of payment of its the Court. liabilities outstanding as of the commencement date © Rajah & Tann Asia 6 Areas Cambodia Laos Myanmar Philippines Vietnam Scope of except as may be Moratorium provided herein. The moratorium shall not apply to: o cases pending appeal before the Supreme Court; o cases pending before a specialized court capable of resolving the claim more quickly, fairly and efficiently than the Court; o enforcement of claims against sureties and other persons liable with the debtor, and third party or accommodation mortgagors; o actions of customers or clients of a securities market participant to recover monies and securities entrusted to the debtor in the © Rajah & Tann Asia 7 Areas Cambodia Laos Myanmar Philippines Vietnam Scope of ordinary course of Moratorium business; o actions of a licensed broker or dealer to sell pledged securities of a debtor pursuant to a securities pledge or margin agreement for the settlement of securities transactions; o clearing and settlement of financial transactions through the facilities of a clearing agency; o criminal actions against the individual debtor or owner, partner, director or officer of a debtor; and o actions to preserve a claim against the debtor or to toll the running of the © Rajah & Tann Asia 8 Areas Cambodia Laos Myanmar Philippines Vietnam Scope of prescriptive period Moratorium to file the claim. For pre-negotiated restructuring rehabilitation – The Court may issue a suspension or stay order upon receipt of a valid petition regarding pre-negotiated rehabilitation. For informal restructuring rehabilitation – The debtor and creditors may agree to a standstill period of 120 days pending negotiation and finalization of the out- of-Court or informal restructuring/workout agreement or rehabilitation plan. The standstill period shall be binding on all creditors, subject to compliance with certain requirements. © Rajah & Tann Asia 9 Areas Cambodia Laos Myanmar Philippines Vietnam Invocation of The stay is automatic The Court may, on the The moratorium is For Court-supervised Automatically after five Moratorium upon the opening of application of the automatic. Any action rehabilitation plans working days from an insolvency debtor, impose sought to be initiated and pre-negotiated Court’s acceptance of proceeding by the temporary measures against the company restructuring the petition to initiate Court. to protect the debtor. during the Rescue rehabilitation plans – bankruptcy process. Stage of the Automatic moratorium The Asset Supervision rehabilitation process, upon the Court’s Committee, appointed can only be initiated determination that the by the court following with the permission of petition is sufficient in a petition for the Court. form and substance. bankruptcy, may propose to the Court For informal measures to protect restructuring the assets of the rehabilitation – debtor. Subject to agreement of the standstill period among negotiating parties. The parties may request the Court’s assistance to enforce the standstill period. Territorial Silent. Silent. Local effect: There is The Model Law on Local effect: There is Effect of no indication that the Cross-Border no indication that the Moratorium moratorium applies to Insolvency of the moratorium as actions initiated United Nations Center prescribed under against the debtor in a for International Trade Vietnam’s Law on foreign jurisdiction. and Development was Bankruptcy applies to adopted. Local courts actions taken against a may cooperate with debtor and its property foreign courts for in a foreign jurisdiction. purposes of information
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