Winding up of a company or liquidation is the process where assets of the company are collected and sold to pay existing debts. The amount left after paying all the costs, expenses, and debts can be further distributed among company shareholders. When the winding-up process is completed, the organization is formally dissolved, and then its existence in the market ceases.
In general terms, there are two ways to wind up a company: the first choice is to permit compulsory windup through court; whereas in the second case, the creditors or shareholders of the company can apply to windup proceedings of the company. The second condition can be called voluntary winding up or liquidation; however, the liquidation through court is called compulsory winding up.
Here we are going to discuss more details about how to wind up a company in Singapore:
Compulsory wind up company Singapore:
There are several grounds that the court can follow for company liquidation in Singapore. The inability of a company to pay off its debts is the biggest reason to go ahead with compulsory winding up. The company is considered unable to repay debts when:
- A creditor files a claim against the company in writing requiring the due payment of more than S$15000.00. After this claim, if the demand to pay sum is neglected, the company gets three weeks duration to secure or to deal with the reasonable demand of the creditor.
- Execution of the judgment received by the creditor against the organization stays unsatisfied, whether as a whole or in parts.
- It is already proved in the court that the company is unable to pay back pending debts.
The application for compulsory winding-up can be filed by:
- Company’s creditor
- Company’s director
- The company itself
- Company’s liquidator
- Company’s judicial manager
- Various ministers, as specified in the law
- The monetary authority of Singapore.
Procedure to wind up company Singapore:
The relevant members can submit their application for winding up to the court via Form CIR 11 or CIR 12 under Corporate Insolvency and Restructuring Rules of the year 2020. The forms must be filed along with the supporting affidavit. At the same time, the applicant needs to submit a set deposit to the Official Receiver to process the application further.
While submitting a winding-up application for the company, the applicants can nominate an experienced and licensed insolvency practitioner to handle the procedure on their behalf in front of the court. Before the application hearing in the court, the applicant needs to provide a written consent regarding the appointment of a liquidator to handle the further process. Moreover, an affidavit regarding service must be filed with Form CIR 13 or CIR 14 almost five days before the hearing of winding up the application.
Advertisement regarding company winding up application must be published in any local daily newspaper as directed by the court. Anyone who is willing to oppose the liquidation process can also file the affidavit regarding the same within five days before hearing the application in court. The judge may make the final decision about liquidation by considering all available documents. Now you have gone through details on how to wind up a company in Singapore. It is the right time to hire an experienced advisor to handle the case on behalf of your company.