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In England, it has long been a feature of statutory restructuring processes that the court can release liabilities owed not only by the debtor company, but also by third parties. Typically, those third parties might include related parties of the debtor company, guarantors of its obligations and the debtor company's personnel or advisors. Similar principles have been applied in Singapore and the US.
However, practice has recently diverged in these three key global restructuring centres giving rise to the possibility that a debtor company may seek to take advantage of the broader releases that might be able for third parties in England and Singapore than in the US.
The article considers the current availability of third party releases in each of England, Singapore and the US, the implications of this availability and the possibility that any restrictions on third party releases can be bypassed through cross-border recognition of foreign restructuring processes.
This article first appeared in Volume 23, Issue 4 of International Corporate Rescue and is reprinted with the permission of Chase Cambria Publishing – chasecambria.com.
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