South and Southeast Asia are undergoing a wave of insolvency and restructuring law reforms, reshaping the region’s financial and corporate landscape. This publication outlines these reforms and examines their potential implications for private capital investors, corporates and other creditors.
Key trends:
Shift towards early stage rescue and debtor in possession restructuring models.
- Vietnam, Thailand and India are introducing or expanding debtor in possession restructuring processes, aimed at intervening earlier to preserve enterprise value and avoid formal liquidation. This builds on the debtor-in-possession model already introduced in Singapore and Malaysia and the global trend which typically prioritises corporate rescue and preserving enterprise value over immediate creditor enforcement in the event of default or payment issues. Whenever the law provides for a moratorium or stay on enforcement it is something creditors must think carefully about at the structuring and enforcement stages.
Increasing domestic and international restructuring options in a world of forum shopping
- In an increasingly competitive marketplace for cross-border debt restructurings, economies without established debt restructuring frameworks – such as Vietnam – are under pressure to introduce and develop them, while markets that have existing frameworks, such as Singapore, Malaysia, Thailand and India, are focusing on expansion and improvement. The pace of activity will also place a spotlight on other markets that are not making such moves, such as Indonesia.
Growing emphasis on cross‑border recognition and cooperation
- The region is moving, slowly, towards greater cross‑border cooperation. Malaysia has adopted the UNCITRAL Model Law (albeit with a unique self-protection mechanism). Singapore is proposing to extend its Model Law framework. Vietnam has introduced provisions specifically aimed at enhancing court‑to‑court cooperation (but has not adopted the UNCITRAL Model Law). India has established a framework giving the government power to promote multi-jurisdictional cooperation in cross-border insolvency proceedings which may or may not include adopting the UNCITRAL Model Law. We may be moving into a phase of the haves and the have-nots – those that have the Model Law which enables a more flexible approach to cross-border restructuring and those that do not, which may require a local debtor to use the domestic process as the primary tool.
These are all competitive advantages as investors consider downside protection when determining where they seek to deploy their capital.
Recent developments across South and Southeast Asia
1. Vietnam
Vietnam's Law on Rehabilitation and Bankruptcy No. 142/2025/QH15 (RBL 2025) came into effect on 1 March 2026. The significant change is the introduction of a new stand-alone rehabilitation procedure for distressed companies, designed to facilitate the rescue of viable businesses before bankruptcy proceedings commence.
This reflects prevailing practice in the region where restructuring is typically prioritised over bankruptcy. Previously, Vietnamese debtors did not have a recognised option to use a domestic debt restructuring process to restructure their debts and as a result looked to jurisdictions such as Singapore (in the case of Novaland) and England (in the case of Vinashin). A domestic framework is now in place.
2. Thailand
Thailand's House of Representatives has recently approved amendments to Thailand's Bankruptcy Act. These amendments are pending Senate review and, if implemented, will mark a significant change in the restructuring landscape for distressed debtors in Thailand.
The biggest change is the introduction of pre-packaged rehabilitation proceedings. This aims to provide companies with a faster and more efficient route to restructuring their businesses. Thailand has drawn inspiration from the US Chapter 11 framework for this development.
Whereas the existing rehabilitation process in Thailand involves the terms of the restructuring being negotiated only after the rehabilitation petition has been submitted and accepted, the pre-packaged route involves the parties negotiating and agreeing the restructuring and bringing that to the court for approval. Court approval and a planner appointment will still be required for pre-packaged rehabilitation processes, but the timeline for it is intended to be shorter.
3. India
India’s Insolvency and Bankruptcy Code (IBC) was enacted in 2016 to introduce a new regime which could more effectively and efficiently resolve ongoing financial distress. While the IBC has been viewed as an overwhelming success, consistent with the ongoing economic reform in India, further adjustments have recently been made.
The IBC (Amendment) Bill was introduced in August 2025, proposing a comprehensive overhaul of the corporate insolvency framework. On 30 March 2026 the Lower House of the Indian Parliament passed the Bill and on 6 April 2026 it received Presidential assent becoming the Insolvency and Bankruptcy Code (Amendment) Act. This Act will come into force on a date notified by the government. The amendments are designed to make the IBC more attractive to investors and establish a clearer, more consistent approach.
4. Malaysia
On 29 July 2025 Malaysia enacted the Cross-Border Insolvency Act 2026 (Act 877) (the CBIA), which substantially incorporates the Model Law. The CBIA will come into operation upon a date selected by a ministerial notification.
In short this means that a debtor that undertakes a restructuring or insolvency process in another jurisdiction can bring that to Malaysia and have it recognised without the need to commence separate or independent Malaysian proceedings.
5. Indonesia
Indonesia’s 2004 Bankruptcy Law provides for two court-driven restructuring processes – bankruptcy and suspension of debt repayment (PKPU). While the PKPU has now had decades' worth of use and has been recognised in the US, Singapore, Australia and other markets, the application of the law has attracted criticism prompting calls for amendments. The criticism comes mainly from two camps – foreign creditors and domestic debtors.Foreign lenders are concerned about transparency and a lack of consistency in the application of the law, whereas domestic debtors are concerned about the ability for creditors to file a PKPU petition against a perfectly solvent debtor thus subjecting it to a potentially damaging insolvency process.
6. Singapore
The Insolvency, Restructuring and Dissolution Act (IRDA), which came into force in 2020, consolidated and modernised the country’s restructuring and insolvency laws. In late 2023, a committee was established to consider further enhancements to the existing regime.
In 2025, the committee published a report, with the key proposals covering: cross-class cram down in schemes of arrangement - creditor voting thresholds and shareholder involvement, judicial management, restructuring framework and tools, Model Law etc. We await an update from the Ministry of Law in Singapore as to the proposed next steps.
