What makes Malaysia and India more creditor friendly than the Philippines?

The Philippines is ‘unpredictable’ in enforcement of laws and resolution time.

The Philippines has been assessed as having an overall weak legal framework for creditors, with rule-of-law risk being “high”, according to S&P Global Ratings.

Varying resolution times for insolvency proceedings, unpredictability of enforcement of contractual rights and resolving insolvencies, and lack of data on successful recoveries brought down the Philippines’ assessment.

The country was put in Group C whilst Malaysia and India were assessed into Group B by S&P in its jurisdiction ranking assessments for insolvencies. These groups assess the recovery prospects of creditors subject to insolvency proceedings after a default. Factors assessed include the country’s insolvency laws and practices, the predictability of insolvency proceedings, and how it is likely to affect recovery prospects of creditors.

In its assessment, S&P said that the Philippines lack a sufficient record on the emergence of preferential claims. It pointed out a lack of data of whether cases saw creditors recover at least 30% of the value of their claims.

“In our view, high rule-of-law risk undermines predictability of the enforcement of contractual rights and the resolution of insolvencies,” it stated.

The resolution time of insolvency proceedings also varies, S&P said. This makes it difficult for creditors to estimate recovery value and length of legal proceedings.

Mitigating these weaknesses are the Philippines’ legal framework, which is supportive of reorganization. It also adopted a model law by the United Nations for cross-border insolvency.

Malaysia and India 'medium'
Malaysia is in the process of adopting a model law by the United Nations for cross-border insolvency, having passed its Cross-Border Insolvency Bill 2025 in July.

“We expect this to produce a more certain and predictable legal framework for domestic and foreign creditors and entities,” S&P wrote.

“Our assessment of the medium for Malaysia's creditor-friendliness reflects insolvency laws and practices that generally support creditors, with the Companies (Amendment) Act 2024 providing some of the latest enhancements,” it added.

However, Malaysia has insufficient empirical evidence on the realization of recoveries through insolvency proceedings and a limited record of implementation following the latest amendments.

India, meanwhile, has a record of successful creditor-led resolutions under its Insolvency and Bankruptcy Code (IBC). Average recovery values have also improved to more than 30%, from 15%-20% under the previous bankruptcy regime.

“The IBC has strengthened credit discipline and tilted the resolution process in favor of creditors, in our view, with promoters potentially risking losing control of their business, unlike under earlier resolution regimes,” the ratings agency stated.

However, India’s resolution regime still lags more established Group A and some Group B jurisdictions. Average recovery rates of about 30% are comparatively low, S&P noted.