Bill Introduced for Simplified Insolvency Programme to be Revamped and Made Permanent

On 11 November 2024, the Ministry of Law (“MinLaw“) introduced the Insolvency, Restructuring and Dissolution (Amendment) Bill (“Bill“) in Parliament to revamp the Simplified Insolvency Programme (“SIP“) and make it a permanent feature of the Insolvency, Restructuring and Dissolution Act 2018. The revamped, permanent SIP will facilitate better access to insolvency processes by providing a simpler and more cost-effective process, which will benefit more companies going forward.

For background, the SIP was introduced in 2021 as a temporary measure to support eligible micro and small companies (“MSCs“) facing financial difficulties during the COVID-19 pandemic by helping them restructure their debts to rehabilitate their business or wind up via a simpler, faster and lower cost insolvency process. The current SIP is set to cease on 28 January 2026. For more information, please see our Legal Update titled “Application Period for Simplified Insolvency Programme Extended to 28 January 2026“.

The Bill will modify two processes under the SIP, namely the Simplified Debt Restructuring Programme (“SDRP“) and the Simplified Winding Up Programme (“SWUP“), with the key changes to these processes to be administered by licensed insolvency practitioners (“IPs“) in the private sector who possess prescribed qualifications or relevant experience. In this regard:

  1. Simpler eligibility criterion: The new SDRP and SWUP will have only one general eligibility criterion, namely that the company’s total liabilities must not exceed S$2 million. This will expand the scope of the SIP beyond MSCs.

  2. Simpler application documentation: For the SDRP, only key supporting documents will be required upon application for the SDRP. The IPs assessing whether the company meets the entry requirements into the SDRP may request more documents. For the SWUP, if the company has incomplete records, it may submit a directors’ declaration that the eligibility criterion is met. Enforcement provisions will target false declarations.

  3. More effective administration:
    • For the SDRP: (i) only one class of creditors (rather than up to three classes in the current SDRP) will vote on the debt repayment plan; (ii) the court’s involvement will be limited to situations where approval of such plan is disputed by creditors on specified grounds; and (iii) the SDRP may transit to other liquidation processes so that unviable companies can be liquidated and dissolved efficiently.
    • For the SWUP: (i) a directors’ resolution may be accepted for companies with uncontactable members; (ii) the requirement to publish notifications in the Government e-Gazette and newspapers will be removed, although publication on MinLaw’s Official Receiver’s website, and lodgements with the Registrar of Companies on the Accounting and Corporate Regulatory Authority’s Bizfile for permanent record, will still be required; (iii) if no creditor funding is given to the IP to conduct investigations to recover assets, the IP will not be required to take any further investigative action and may proceed to complete the liquidation and thereafter dissolve the company; and (iv) the SWUP may transit to other liquidation processes so that unviable companies can be liquidated and dissolved efficiently.
  1. Strengthened creditor protection: For the SDRP: (i) the initial moratorium period during which creditors are unable to enforce their rights will be shortened from 90 to 30 days; and (ii) a company which fails to successfully complete the SDRP cannot apply for the SDRP again until a black-out period of at least five years has elapsed. 

The detailed list of the differences between the features of the current and revamped SIP can be found in the Annex below MinLaw’s Press Release.

Click on the following link for more information:


Disclaimer

Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.

The contents of this publication are owned by Rajah & Tann Asia together with each of its member firms and are subject to all relevant protection (including but not limited to copyright protection) under the laws of each of the countries where the member firm operates and, through international treaties, other countries. No part of this publication may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose save as permitted herein) without the prior written permission of Rajah & Tann Asia or its respective member firms.

Please note also that whilst the information in this publication is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as legal advice or a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. You should seek legal advice for your specific situation. In addition, the information in this publication does not create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this publication.

CONTACTS

Head, Restructuring & Insolvency
+65 6232 0436
Brunei, Singapore, South Asia,
Deputy Head, Restructuring & Insolvency
+65 6232 0419
Singapore,
Deputy Head, Restructuring & Insolvency
+65 6232 0590
Singapore, South Asia,

Country

EXPERTISE

Share

Rajah & Tann Asia is a network of legal practices based in Asia.

Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client.

This website is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this website.

© 2024 Rajah & Tann Singapore LLP. All rights reserved. Rajah & Tann Singapore LLP (UEN T08LL0005E) is registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A) with limited liability.