The free-to-download guidance covers procedures in 16 jurisdictions
The Asian Business Law Institute (ABLI) and International Insolvency Institute have released a free-to-download, best practice guide to help financially distressed businesses adopt the cheaper, easier debt-restructuring alternative to formal insolvency proceedings – also known as an out-of-court workout – in 16 different jurisdictions across Asia.
An out-of-court workout is a non-judicial arrangement based on a private contract between a debtor and its creditors. The workout generally costs less time and money to complete than formal rehabilitation procedures such as liquidation or insolvency proceedings and judicial reorganisations, while still allowing businesses to continue operating throughout the workout process.
“Many Asian jurisdictions are not yet familiar with the concept of out-of-court workout, let alone how to conduct one,” said ABLI deputy executive director Mark Fisher. “The workout guide thus aims to strike the right balance between espousing general best practices in the form of principles and providing practical guidance in the form of tips, considering the lack of sufficient knowledge or even awareness of out-of-court workout in Asia.”
The Guide on Conducting an Out-of-Court Workout in Asia is the third joint publication of the ABLI and the International Insolvency Institute, following their 2020 title, Corporate Restructuring and Insolvency in Asia, and their guide on the treatment of insolvent micro and small enterprises in Asia published last year.
The Guide on Conducting an Out-of-Court Workout in Asia provides step-by-step advice on how to conduct an out-of-court workout across 16 jurisdictions in Asia, including Singapore, China, Japan and the Philippines. It also informs readers of the key principles that frame a successful out-of-court workout and 11 practical tips to support it, including having a steering committee to facilitate negotiations, classify creditor interests, and allow creditors to feel fairly treated in the event multiple creditors are involved.
“We are delighted to publish the workout guide with the Asian Business Law Institute,” said International Insolvency Institute president John Martin. “… The summary of principles and practice tips will hopefully guide law reform across Asia and prompt discussion between professionals, academics, and judges alike regarding this important area of practice.”
The guide was drafted by restructuring and insolvency expert Ian Mann, who drew from two decades of global experience, including 15 years of practice in Asia. It includes the insights of practitioners, academics, and policymakers from across the globe. The United Nations Commission on International Trade Law, the World Bank, and INSOL International were also among the global organisations consulted during the year-long drafting process.