If you are facing insolvency in Singapore, then you need to go through the procedures by Judicial management of Singapore which will occupy an intermediate step between debt restructuring and liquidation. The Insolvency, Restructuring and Dissolution Bill was passed in the parliament on 1 October 2018 and was gazetted by IRDA on 7 November 2018.
The key changes of the provisions of the IRDA are as follows:
- Restriction in Ipso Facto clauses in insolvency proceedings. The Ipso facto clause provided the right to terminate or modify the operations of a contract upon triggering of some events.
- New provisions has been introduced for wrongful trading. In this kind of situation, the court will have the power to declare a person who is a party to the company trading wrongfully to be held personally liable for any kind of debt or any other liabilities of the company,
- Safeguarding the litigation and allowing the liquidator to assign to third parties for some proceedings in court.
- There is increase in monetary thresholds under the IRDA for Corporate insolvency and bankruptcy regime.
- If the company decides to go for winding-up, in that case they must nominate a licensed insolvency practitioner which will be further increases their liquidation cost. As a liquidator, the official receiver may still be appointed provided the applicant was not able to obtain the consent of a licensed insolvency practitioner despite taking all necessary steps and of course the official receiver has given the consent for nomination.
- Now there is an exception to the moratoria in the scheme of arrangement application which states that the moratoria will not be applicable to certain proceedings prescribed by regulations. Only the admiralty proceedings may be commenced notwithstanding the moratoria.
- For a close Singapore company or in case of bankruptcy, the secured creditors need to notify the trustee in bankruptcy within 30 days of the bankruptcy order of their intention and should realise the security within 30 days after the date of bankruptcy order. In this way the official assignee would have a clear picture of the close Singapore company or the bankrupt company.
- A new licensing regulations has come into effect for the licensed insolvency practitioners. Under this new regulation, a person should hold a valid insolvency practitioner’s license from the Ministry of Law in order to take insolvency officeholders appointments.
However, this license will not be mandatory, if the person wishes to be appointed as liquidator in a member’s voluntary winding up or as a scheme manager in a scheme or arrangement commenced under the IRDA.
The IRDA is implementing a much modern and progressive natured laws in Singapore for local insolvency and restructuring regime. The new laws will enhance Singapore’s debt restructuring ecosystem and thus bringing Singapore one step closer of being international debt structuring and insolvency centre. Hope, now you have a clear idea about the Singapore insolvency regime.