This material was first published by Thomson Reuters, trading as Sweet & Maxwell, 5 Canada Square, Canary Wharf, London, E14 5AQ, in the Journal of International Banking Law & Regulation as ‘Legal Analyses: Ipso Facto Clauses and their Position in Financing Documents in Singapore’ JIBLR 2021, 36(11), 485-486 and is reproduced by agreement with the publishers.
This legal analysis examines developing market practice in the Singapore legal market on the contractual treatment of the restriction on ipso facto clauses. This legal analysis discusses the relevant legislation that restricts the operation of such ipso facto clauses and the different approaches that parties to a financing transaction may take when tackling this issue.
With the coming into force of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) on 30 July 2020, the contractual treatment of the restriction on ipso facto clauses imposed by s.440 of the IRDA has come into sharp focus on financing transactions in the Singapore market. In general terms, an ipso facto clause is a contractual provision that allows one party to the contract to terminate or modify the operation of the contract upon the occurrence of certain specified events (e.g. insolvency, appointment of an administrator, receiver or liquidator) in respect of another party.
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