New Bill seeks to simplify, lower costs for company insolvency

More companies will benefit from a simpler and lower cost insolvency process, as the Simplified Insolvency Programme will be revamped and made permanent under a Bill introduced in Parliament on Monday (Nov 11).

The Insolvency, Restructuring and Dissolution (Amendment) Bill seeks to modify two processes under the insolvency programme.

The processes are the simplified debt restructuring programme and the simplified winding-up programme.

The new processes will have only one general eligibility criterion, which is that the company’s total liabilities must not exceed S$2 million.

This will allow companies that are not small and micro to benefit from the insolvency programme, said the Ministry of Law.

Currently, under the debt restructuring programme, companies are subjected to four eligibility criteria – thresholds on revenue, liabilities, number of creditors, and employees. Meanwhile, the winding-up programme includes those four criteria, as well as the company’s estimated realisable asset value.

The new Bill also aims to make the application process simpler.

Only key supporting documents will be required when a company applies for the restructuring programme. However, the insolvency practitioners may request for more documents if needed.

For the winding-up programme, a company with incomplete records may submit a directors’ declaration that the eligibility criterion is met.

To prevent abuse, enforcement measures will target false declarations, said the ministry.

Additionally, the revamped programme will improve administrative processes. In the new restructuring programme, only one class of creditors will vote on the debt repayment plan, instead of up to three currently.

The court will only be involved when the approval of a debt repayment plan is contested and only on specified grounds.

The restructuring programme may also transit to other liquidation processes so that unviable companies can be liquidated and dissolved efficiently, said the ministry.

As for the winding-up programme, the new Bill seeks to reduce costs related to publishing notifications in the government’s online gazette and newspapers.

Companies, however, are still required to publish notifications on the Ministry of Law’s website.

Lastly, in the new restructuring programme, the initial moratorium period during which creditors are unable to enforce their rights will be shortened from 90 to 30 days.

Companies that fail to successfully restructure themselves cannot apply for the programme again until at least five years have passed.

The existing simplified insolvency programme is set to cease on Jan 28, 2026.

The new Bill is expected to be debated in the next Parliamentary sitting.

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