A noted American bankruptcy judge’s plan to join Singapore’s top commercial court later this year is a step forward for the island nation’s goal to become a magnet for corporate restructurings.
Judge Christopher S. Sontchi brings the experience of his 16-year tenure at the U.S. Bankruptcy Court for the District of Delaware, one of the busiest courts in the U.S. for commercial bankruptcies.
His switch to the Singapore International Commercial Court is seen as a bold move by the country amid the rapidly increasing globalization, growth and complexity of insolvency practice.
“I think it is a great opportunity to provide a real service to the region’s economy by providing a venue for corporate reorganization that will be commercial and practical in outlook while preserving due process of law,” Sontchi said in an email to Bloomberg Law.
The SICC, originally formed to hear transnational commercial disputes, is expected to start handling more insolvency cases this year, said Aurelio Gurrea-Martínez, an assistant law professor at Singapore Management University and head of the Singapore Global Restructuring Initiative.
Recent changes to the country’s judicial laws made clear that the court, a division of the Singapore High Court, also has jurisdiction to hear international and commercial insolvency, restructuring, and dissolution cases, he said.
Now that the court’s authority is clear, Singapore is taking multiple steps toward becoming a major player in corporate insolvency.
“They are bringing in one of the most prominent and respected bankruptcy jurists in the world,” said Anthony Casey, a business law, finance, and corporate bankruptcy professor at the University of Chicago Law School.
The judge plans to focus on insolvency while serving on the SICC, helping the court chart a path forward in unfamiliar territory.
Although insolvency is relatively new to the SICC, it’s a “natural expansion of its existing docket,” Sontchi said in an email to Bloomberg Law.
Sontchi, who served as the Delaware bankruptcy court’s chief judge from 2018 until 2021, has presided over numerous Chapter 11 cases.
They include big names such as American Home Mortgage Investment Corp., Energy Future Holdings Corp., Borden Dairy Co., and Brooks Brothers, according to the court’s announcement about his upcoming retirement.
Sontchi has already gotten to know several Singapore judges through his work on the Judicial Insolvency Network and the International Insolvency Institute. “It is an amazing bench and I look forward to having them as colleagues,” he told Bloomberg Law.
Singapore’s reputation among corporate and bankruptcy law practitioners for pushing to be the “Delaware of Asia” is flattering to Delaware, but understates the country’s natural place in the region as an international insolvency hub, Sontchi said.
“Delaware’s foundation is its tradition of judicial excellence and practical and fair resolution of disputes,” he said. “New York’s strength is that it is the center of finance in the U.S. if not the world. Texas is, in and of itself, one of the largest economies in the world. Singapore checks each of these boxes.”
“In the region, it is a leader in the rule of law, it is the leader in finance and it has a formidable economy,” Sontchi said.
“The international judges and the Singapore judges have complemented each other and built the jurisprudence and case management of the SICC from inception, and we are confident that this will continue as the court embarks on its next stage with hearing international insolvency matters with the appointment of Judge Sontchi,” a Singapore Supreme Court spokeswoman told Bloomberg Law.
Sontchi isn’t the first Delaware judge to move to Singapore’s court. But he’s likely the first U.S. bankruptcy specialist to join the court, said Smitha Menon, deputy head of Singapore-based WongPartnership LLP’s restructuring and insolvency practice.
He also was involved with the American Bankruptcy Institute’s commission to study the reform of Chapter 11, a three-year effort that culminated in a 402-page report released in 2014. Sontchi’s experience on the commission’s advisory committee will help the SICC tackle costs and inefficiencies that can bog down some other established systems, Menon said.
“Singapore’s grappling with U.S. bankruptcy law concepts in its revamped legislation is in its fairly early days and Judge Sontchi’s knowledge and experience will help ensure our law continues to develop in a targeted and purposeful way so that businesses can swiftly restructure in Singapore,” she said.
Bankruptcy venue shopping, already occurring within the U.S., is taking on an international component as corporations vie to find courts that best suit their needs.
Traditionally, the U.S. has had one of the most attractive restructuring frameworks in the world. Its sophisticated judiciary, well-developed case law, and advanced restructuring ecosystem of bankers, investors, and qualified insolvency professionals give the country that status, Gurrea-Martínez said.
But in recent years, Singapore and other countries have worked to improve their own restructuring attractiveness, he said.
The modernization of Singapore’s insolvency framework and the development of its restructuring ecosystem, including Sontchi’s arrival, is expected to increase the number of foreign companies seeking to restructure in Singapore, he said.
The country’s efforts to become an international restructuring magnet already include changes to laws and the development of an “ecosystem of rescue culture” involving lawyers, investment bankers, and consultants, said James Sprayregen, the founder of Kirkland & Ellis LLP’s worldwide restructuring group.
“Even independent of this move with Judge Sontchi, which is impressive and splashy, they were already doing a lot of other things,” said Sprayregen, a former member of the Advisory Panel for the Singapore Commercial Court Insolvency and Restructuring Rules Committee.
“Maybe I’ll call this the cherry on top to all the things they’ve already done,” he said.