SG to see more debt restructuring, insolvency cases amidst challenging crypto landscape: Setia Law

A few days ago, dispute resolution specialists and former Partners of Rajah & Tann, Danny Ong and Yam Wern-Jhien, launched the boutique law firm Setia Law in Singapore. The firm will handle dispute resolutions, fraud and financial crimes, debt restructurings, and insolvencies.

According to the duo,  as a financial and legal services hub, Singapore is expected to see significant action as it continues to cement itself as the jurisdiction of choice for cross-border financial disputes and debt restructuring.

e27 caught up with Ong and Wern-Jhien to learn about the firm, the process of dispute resolution, the myth around dispute resolution, and some of the cases they handled in the past.

Edited excerpts:

Can you tell us more about the founding of Setia Law and what inspired its focus on dispute resolution, fraud and financial crimes, and debt restructuring and insolvency?

As a financial and legal services hub, Singapore is expected to see significant action as the country continues to cement itself as the jurisdiction of choice for cross-border financial disputes and debt restructuring.

Singapore’s attractiveness for restructuring and insolvency, thanks to its ever-progressive legal framework, will demand specialist advisors with the experience and track record to service a global clientele and the ability to move quickly.

In 2022, many troubled cryptocurrency platforms turned to Singapore as their restructuring hub, including Zipmex, Vauld, and Holdnaut, following the onset of the crypto winter. There are also important “test” cases and positive outcomes that will likely increase confidence in Singapore as the centre of gravity for Asian restructurings, such as Nam Cheong Limited from Malaysia, PT MNC Investama Holdings from Indonesia, PT Modernland from Indonesia, and Malaysian video streaming service iFlix, which have completed successful debt restructuring exercises via schemes in Singapore.

Against this backdrop, the time was right to launch Setia Law – a firm with a unique mix of specialism including:

• local knowledge and technical specialists that are applicable across multiple jurisdictions,
• a network of leading professional services firms across the world
• the ability to be flexible and fast to respond to client’s needs without the limitations that come with larger firms.

What sets Setia Law apart from other law firms in Singapore that also specialise in dispute resolution and financial law?

We are one of the few legal boutique firms in Singapore with proven experience in cross-border restructuring and insolvencies, complementing our dispute credentials. More recently, we gained proven experience in handling cryptocurrency disputes and distress cases.

Also Read: The regulatory war on cryptocurrency

As Singapore grows into a restructuring hub for the crypto industry, Setia stands out with its market-leading team, which has dealt with high-profile cases to yield positive outcomes.

In addition to our unique mix of specialisms, we have a close network of leading professional services firms across the globe that add to our ability to develop winning strategies for our clients.

Could you walk us through the typical process that clients go through when they approach Setia Law with a financial or legal issue?

Our clients typically look to us within the first 24 to 48 hours of any developing crisis, which could be anything from a cybersecurity breach to financial distress situations to the discovery of fraud. They come to us because they know we can put together an effective response team and strategy in time-sensitive settings, drawing on our lawyers’ formidable regional experience and knowledge, as well as close relationships with leading professional services firms across the globe.

How does Setia Law approach cross-border financial crises, and what unique challenges does this kind of work pose when compared to domestic cases?

Our talented team of expert lawyers has deep expertise in approaching financial crises, having built their experience at a global level. This gives them the unwavering focus needed for dispute resolution and crisis management.

The challenge in cross-border situations lies in jurisdictional issues, where lawyers have to navigate the differences in legal systems to determine which jurisdiction has the authority to adjudicate the dispute and to determine the rules for the burden of proof. There are also barriers to enforcing a judgment, and the complexity of cross-border legal disputes requires a high level of expertise in international law and the agility to balance expectations from multiple jurisdictions.

At Setia, our specialism, coupled with a global network, enables us to be nimble in navigating complex landscapes and pulling together the right partners across different jurisdictions to tailor our approach for each client.

Can you discuss any particularly challenging or noteworthy cases that Setia Law has worked on in the past?

The Setia Law team has been at the forefront of major global crises over the last two decades, including the dot-com bubble, the global financial crisis and the crypto winter. Some of the notable financial and regulatory experience includes:

• Acted in the Lehman Brothers’s liquidation, from being involved in leading the Singapore aspects of the acquisition of the Asian Lehman franchise by Nomura to the complexity of untangling some of the most perplexing legal issues arising from that.
• Acted for B2C2 Ltd, one of the world’s largest market makers in digital currencies, in proceedings before the Singapore International Commercial Court. This was the first action in Singapore involving the algorithmic trading of digital currencies.
• Acted for the liquidators of BSI Bank and separately, a US investment bank, in relation to investigations into alleged laundering and dissipation of some US$700 million purportedly belonging to Malaysia-state owned company, 1MDB, through various channels which have spawned criminal investigations and legal proceedings in Singapore, Switzerland, New Zealand, and the US.
• Acted for Bank JTrust and JTrust Co Ltd in defending claims before the Singapore Court arising from English-law-governed bonds, involving parallel proceedings in New York, Mauritius, and Japan.
• Acted for STMicrolectronics, one of the largest global semi-conductor manufacturers, in a dispute relating to the supply of chips for a US$600 million national identity card project in Southeast Asia, involving parallel proceedings in Singapore and Indonesia.

What kind of clients does Setia Law typically work with, and what industries do they come from?

Setia Law acts for a broad range of clients, including multinational corporations, state-owned entities, financial institutions, and individual clients. Our industry expertise ranges from technology, blockchain, and digital assets to shipping and financial services.

What common misconceptions do people have about dispute resolution, fraud and financial crimes, debt restructuring and insolvency, and how does Setia Law work to dispel those misconceptions?

As with many legal cases, there is an assumption that they will go to court. In reality, many alternatives for dispute resolution can be quicker and more aligned with a company’s business objectives.

In the case of debt restructuring and insolvency, companies often assume that it is only undertaken to save themselves from the brink of retirement. However, it also applies to any organisation that may have debt but is still profitable. It is not always about liquidation but also about looking at tightening key areas of the business.

Also Read: Why Liminal sees compliance as the way to go for the crypto industry

At Setia Law, we aim to dispel misunderstandings through a tailored approach guided by a culture of respect, resilience, and reliability. This means that we are always available to answer questions and clarify doubts that clients may have about the litigation process.

I understand Setia has handled some high-profile cases, such as Vauld’s. Can you talk about this particular case? Do you see an increasing trend of crypto companies doing insolvency in the coming months?

To clarify, the Vauld case was handled by our lawyers in their previous law firm. Therefore, they are unable to provide any comment on the case.

More generally, amidst the challenging crypto landscape, we anticipate further downturns and more firms, both local and from other jurisdictions, requiring debt restructuring and insolvency services. Many of these firms will likely turn to Singapore as the jurisdiction of choice due to its ever-progressive laws and deep bench of expertise.

Is there a trend of VCs approaching your company for insolvency, etc? In such cases, what will happen to companies that have raised money from them?

Yes, we at Setia Law get a fair amount of VCs approaching us concerning investments that are about to or have gone into default. There are various ways in which the VCs can protect their interests in their investment in such situations, including possible private or court-sanctioned restructuring, or where there are corporate governance concerns or fraud involved, judicial management.

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