Publication
Government Investigations in Singapore 2025
We have contributed the Singapore chapter of Getting the Deal Through, Government Investigations 2025.
Global | Publication | July 2021
This article first appeared in Volume 18, Issue 1 of International Corporate Rescue and is reproduced here with the permission of Chase Cambria Publishing - www.chasecambria.com.
With the influx of insolvency cases expected on a global basis in coming months as government support measures are wound back, now is an opportune time for businesses to consider the extent of their potential exposure if a subsidiary liquidates. In particular, can losses be isolated within a liquidating subsidiary, or will there be a contagion effect, so that a parent entity may be held liable for the outstanding debts of the subsidiary?
Given the global, cross-border nature of many modern businesses and the attendant complex corporate group structures, it is important for entities to understand the legal liability framework that applies in the different jurisdictions where they operate or are formally organised. The particular focus of this article is the potential liability of parent entities for the debts of their insolvent subsidiaries in Australia and the United States.
In these jurisdictions, the risk that parent entities will be liable for the debts of their insolvent subsidiaries is greatest where the corporate structure has been used in an improper attempt to avoid legal liabilities, or where assets have been intermingled across different entities within the corporate group, a parent has improperly benefited from the operations of the subsidiary, and/or the parent entirely controls and directs the operations of the subsidiary.
The liability risk in the United States is greater than in Australia, with parent entities potentially liable, on the basis of substantive consolidation, for a broad range of unsecured debts of a debtor subsidiary. Moreover, in certain circumstances a parent of a debtor subsidiary in the United States may have its intra-group loans subordinated to other creditors under equitable principles. However, those outcomes are far from the norm and, as a general rule, courts will respect corporate separateness and will enforce properly documented and incurred intercompany debts.
Significantly, in both the United States and Australia, the current legal principles adopted by the courts in assessing parent entity liability lack precision and are largely untested in the pandemic context, and this itself may serve as a deterrent to responsible risk-taking and value-creating activity within a corporate group. This is an area that could benefit from further legislative guidance as law reform becomes a more dominant focus in the economic recovery period across the world in response to COVID-19.
Publication
We have contributed the Singapore chapter of Getting the Deal Through, Government Investigations 2025.
Publication
The private credit market and direct lending have grown and diversified immensely in the past decade, offering alternative sources and terms of debt compared to those historically provided by the syndicated leveraged loan and public issuance markets. Consequently, they are fast becoming pivotal components in the capital ecosystem, so much so that the Bank of England consider that the private credit market is currently responsible for approximately $1.8 trillion of debt issuance, which is four times its size in 2015. This growth has been particularly pronounced in Europe and the US but there has also been significant activity in Asia.
Publication
The EU’s Artificial Intelligence Regulation, commonly referred to as the AI Act, is expected to come into force during the summer of 2024 (the AI Act). The AI Act will be the first comprehensive legal framework for the use and development of artificial intelligence (AI), and is intended to ensure that AI systems developed and used in the EU are safe, transparent, traceable, non-discriminatory and environmentally friendly.
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