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

The Insolvency, Restructuring and Dissolution (Amendment) Bill (“Bill“) was introduced by the Ministry of Law (“MinLaw“) for Second Reading and passed in Parliament on 7 January 2025. The Bill seeks to amend the Insolvency, Restructuring and Dissolution Act 2018 to revamp the Simplified Insolvency Programme (“SIP“) and make it a permanent feature. The SIP was introduced as a temporary measure in 2021 to help eligible micro and small companies during the pandemic to restructure their debts to rehabilitate their business, or to wind up via a simpler, faster and lower cost insolvency process. It has since been extended three times, with the current SIP set to cease on 28 January 2026.

The Bill will modify two processes under the SIP: (i) the Simplified Debt Restructuring Programme (“SDRP“), and (ii) the Simplified Winding Up Programme (“SWUP“). Unlike the current SIP, the revamped SIP will see the key changes to these two processes administered by licensed insolvency practitioners (“IPs“) in the private sector who possess prescribed qualifications or relevant experience.

1. Simplified eligibility criteria. The revamped SDRP and SWUP will have only one general eligibility criterion, i.e. the company’s total liabilities must not exceed S$2 million. For the SDRP, the Restructuring Adviser (a licensed IP appointed by the company to advise in matters relating to its entry into the SDRP) has the discretion to assess: (i) whether the company meets the general eligibility criterion; and (ii) that there is no circumstance that would render the company unsuitable for entry into the SDRP.

2. Simpler application documentation. For application for the revamped SDRP, only key supporting documents will be required (e.g. the special resolution passed in a general meeting authorising the company’s entry into the SDRP). The Restructuring Adviser will assess whether the company meets the entry requirements. For entry into the revamped SWUP, in certain circumstances, the company may submit a statement from the company’s board of directors that it reasonably believes that the eligibility criterion is met and is not aware of any circumstance that would render the company unsuitable for entry into the SWUP.

3. More effective administration

• • Under the revamped SDRP: (i) the debt restructuring proposal will be binding on all creditors if it is approved out-of-court by the requisite majority of creditors at a meeting summoned by the Restructuring Adviser; (ii) court involvement will be limited to situations where approval is disputed by creditors on specified grounds (e.g. where material procedural irregularity, substitution or splitting of classification of creditors is necessary, or the approved proposal is contrary to the interests of creditors as a whole); (iii) the court hearing the application may make any order it thinks fit, including to revoke or suspend the proposal, or give directions to the Restructuring Adviser including to put proposed modifications to creditors for their consideration (but the material commercial terms may not be modified); (iv) the notice to summon the meeting must contain specific information and be given to every creditor; (v) the voting class will consist of all unsecured creditors and preferential creditors (if applicable) who will be entitled to vote on the proposal, and secured creditors will only be bound by the proposal to the extent that they are under-secured or they consent to the same; and (vi) if no proposal is approved, the SDRP may transition to other liquidation processes.

• • Under the revamped SWUP: (i) in lieu of the company passing a special resolution in general meeting authorising entry into the SWUP, a directors’ resolution may be accepted if the company satisfies certain conditions (e.g. inability to contact members, inability to obtain quorum, and dormant operations); (ii) the requirement to publish notifications in the Government e-Gazette and local newspapers will be removed, but 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, are required; (iii) if no creditor funding is given to conduct investigations to recover assets, the IP will not be required to take further investigative action and may proceed with the simplified winding up and dissolve the company; and (iv) the SWUP may transition to other liquidation processes (e.g. application to court for winding up) if the liquidator’s assessment is that the company is unsuitable for simplified winding up.

4. Strengthened creditor protection under revamped SDRP. The initial moratorium period during which creditors are unable to enforce their rights against the company while it frames the proposal to its creditors, will be shortened from 90 to 30 days, extendable once for a period of up to 30 days. A company which fails to successfully complete the SDRP cannot apply for the SDRP again until a blackout period of at least five years has elapsed.

Click on the following links for more information (available on the MinLaw website at www.mlaw.gov.sg):

• MinLaw Press Release titled “Simplified Insolvency Programme to be Revamped and Made Permanent to Support Financially Distressed Companies”
• Speech by Minister for Culture, Community and Youth & Second Minister for Law, Mr Edwin Tong SC, on the Second Reading of the Insolvency, Restructuring and Dissolution (Amendment) Bill