Singapore plans to overhaul its restructuring and insolvency framework to better support viable businesses facing financial distress, Law Minister Edwin Tong announced on October 21. Speaking at the Singapore Insolvency Conference organized by the Insolvency Practitioners Association of Singapore, Tong highlighted the need to strengthen the country’s legal tools to facilitate business rehabilitation rather than hastening liquidation.

Judicial management, introduced in Singapore four decades ago as a mechanism for rescuing struggling companies, has often served merely as a step toward liquidation, resulting in added costs and delay without achieving meaningful recovery, Tong said. To address this, the Ministry of Law will amend the Insolvency, Restructuring and Dissolution Act 2018 (IRDA), with the first reading of the bill scheduled for late 2026 or early 2027. The amendment aims to clarify that judicial management is intended as a rehabilitative measure.

Under current law, judicial management places a company temporarily under the control of an independent, court-appointed judicial manager to devise a debt restructuring plan while protecting the company from creditor lawsuits. If creditors reject the proposed rescue plan, the company typically proceeds to liquidation. The upcoming reform will require that applications for judicial management provide clear explanations of how the process will enable rehabilitation and demonstrate tangible benefits compared with liquidation. Should judicial management fail, the circumstances must be disclosed, and judicial managers will generally be barred from becoming the company’s liquidators.

Tong emphasized that financial distress does not necessarily indicate a business’s insolvency. Many companies may be hindered by unsustainable debt or temporary liquidity issues, even if their underlying business remains sound. A stronger restructuring framework is needed in Singapore’s mature economy to help businesses withstand cyclical fluctuations and absorb economic shocks, he said.

In addition to judicial management reforms, the government will improve the cross-class cramdown mechanism, which allows a restructuring plan to be approved by the court despite dissent among classes of creditors. Since its introduction in 2017, this tool has seen limited use, partly due to high voting thresholds requiring approval from a majority in number and 75% by value across creditor classes. The reform will adjust these thresholds to make the mechanism more accessible and extend its use to shareholders in appropriate cases, acknowledging that shareholders without residual economic interest may still block viable restructurings. Protections will remain to ensure fair treatment of affected parties.

Lastly, Singapore will adopt two additional United Nations Commission on International Trade Law (UNCITRAL) Model Laws: one on Enterprise Group Insolvency and another on the Recognition and Enforcement of Insolvency-Related Judgments. These will complement Singapore’s existing adoption of the UNCITRAL Model Law on Cross-Border Insolvency in 2017. Together, these laws will enhance coordination of insolvency proceedings within corporate groups and across jurisdictions, strengthening Singapore’s position as an international restructuring hub.

Tong noted the importance of this move given Singapore’s growing role in international business, with more than 90,000 foreign enterprises present in 2025—up from 50,000 in 2015—and an asset management industry overseeing $6.7 trillion in assets, most of which are foreign-owned. As businesses increasingly operate across borders, harmonizing insolvency laws becomes crucial to preserving value and ensuring legal certainty.