Your Authoritative Source on Singapore Law

Section 440 of the Insolvency, Restructuring and Dissolution Act 2018: Restrictions on Ipso Facto Clauses

Chong Yi-Hao Clayton

[2019] SAL Prac 27

Commercial contracts often contain ipso facto clauses – clauses that allow one party to terminate the contract or exercise certain rights if specified events occur, usually if the counterparty becomes insolvent or enters insolvency proceedings. The Insolvency, Restructuring and Dissolution Act 2018 introduced restrictions on the operation of certain ipso facto clauses while a company is undergoing restructuring proceedings. This article discusses the implications of the new ipso facto regime, potential areas of uncertainty, and issues which practitioners should consider when advising on and drafting commercial agreements, in the light of the new regime.