Arbitration analysis: During restructuring proceedings, it is critical for the debtor company to be given ‘breathing room’ to develop its restructuring plan. This is typically achieved through a moratorium, which bars third parties from bringing proceedings against the company and its assets. This potentially gives rise to tension with the arbitration sphere. In a pro-arbitration jurisdiction like Singapore, is the court under a mandatory obligation to grant a carve-out to the restructuring moratorium so that a third party may commence an arbitration against the debtor? In Sapura Fabrication v GAS, the Singapore Court of Appeal opinion that there is no mandatory obligation on the court to grant such a carve-out. However, the court has the discretion to decide whether to do so. Relevant factors include the nature of the claim to be brought against the company, the timing of the carve-out application and any prejudice that may be caused to the creditors or restructuring. Written by Eden Li, partner...
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