THE application period for the Simplified Insolvency Programme (SIP) has been extended by 24 months, to Jan 28, 2026, from Jan 29, 2024.

It follows two extensions in 2021 and 2022, said the Ministry of Law (MinLaw) on Monday (Jan 22).

Initially open for application for six months, the programme was introduced in October 2020 by the government body for eligible micro and small companies (MSCs) facing financial difficulties, especially during the Covid-19 pandemic, to restructure their debts or wind up via a “simpler, faster and lower cost insolvency process”.

The SIP is administered by the official receiver, or the liquidator. It comprises two separate processes: assisting viable but distressed MSCs to restructure their debts with their creditors via the simplified debt restructuring programme, and assisting unviable MSCs to wind up via the simplified winding-up programme.

“MinLaw plans to make the simplified insolvency processes a permanent feature of our insolvency framework. Extending the SIP application period will provide continued support for financially distressed MSCs in the interim,” the ministry said.

While Singapore’s insolvency laws in the Insolvency, Restructuring and Dissolution Act 2018 generally provide processes for companies with substantial assets, the insolvency solutions offered might not be well suited for the distressed MSCs that have depleted their resources during the pandemic, said MinLaw when it introduced the programme in 2020.

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As at Oct 31, 2023, 44 out of 57 businesses had been wound up by the official receiver, noted Second Minister for Law Edwin Tong during his keynote address at the 2023 Singapore Insolvency Conference.

Tong noted that a typical liquidation process could take three to four years, but a simplified process could be completed within an average of nine months, saving time and cost as well as minimising the impact on the principals behind the business.

Meanwhile, more cost-effective and efficient processes to navigate financial distress could also mitigate the stigma of a failed business, freeing up the entity while preserving creditors’ interest, Tong added.

MSCs that wish to apply for the SIP may visit www.go.gov.sg/sip.