Singapore, Delaware, And New York Courts Adopt Cross-Border Insolvency Cooperation Guidelines

In Short:

The Action: Courts in Singapore and the states of New York and Delaware have formally implemented Guidelines for Communication and Cooperation between Courts in Cross-border Insolvency Matters.

The Motivation: The Guidelines were developed to improve the efficiency and effectiveness of cross-border insolvency proceedings and to encourage coordination and cooperation among relevant courts.

Looking Ahead: Expect the Guidelines to be implemented in other significant jurisdictions.

On February 1, 2017, the Supreme Court of Singapore and the U.S. Bankruptcy Court for the District of Delaware announced that they had formally implemented Guidelines for Communication and Cooperation between Courts in Cross-border Insolvency Matters ("Guidelines"). The U.S. Bankruptcy Court for the Southern District of New York adopted the Guidelines on February 17, 2017. The Guidelines are set forth in the Registrar's Circular No.1 of 2017 in Singapore, Local Bankruptcy Rule 9029-2 in Delaware, and General Order M-511 in New York.

The stated purpose of the Guidelines is "to improve the efficiency and effectiveness of cross-border insolvency proceedings and to enhance coordination and cooperation among courts under whose supervision such proceedings are being conducted." Their objective is to improve efficiency in complex cases, which will benefit all stakeholders by minimizing litigation, time, and expense.

The Guidelines were developed by judges from several jurisdictions, including Australia, Bermuda, the British Virgin Islands, Canada, the Cayman Islands, England and Wales, Singapore, and the United States, who participated in discussions at an October 2016 meeting of the Judicial Insolvency Network in Singapore. The Guidelines are noteworthy not only because they provide a framework for cooperation and communication in cross-border insolvency proceedings, but because the initiative represents the first time that such a common framework has been adopted (and now implemented) by courts. Previously, communication between courts involved in parallel insolvency proceedings was often nonexistent or poorly coordinated, in many cases achieved by means of ad hoc protocols. This created significant delay and uncertainty and sometimes resulted in conflicting rulings from the courts involved.

In Singapore, the adoption of the Guidelines was part of an initiative designed to transform the country into a hub for international restructuring. Part of that initiative...