Insolvency, Restructuring and Dissolution Act to commence on July 30, says Ministry of Law

Singapore

THE Insolvency, Restructuring and Dissolution Act, together with its 48 related pieces of subsidiary legislation, will commence on July 30, 2020, Singapore's Ministry of Law (MinLaw) said on Thursday.

The Act is an omnibus legislation that consolidates the Republic's personal and corporate insolvency and debt restructuring laws into a single piece of legislation. It also updates relevant laws to be aligned with international best practices, according to MinLaw.

When it comes to personal bankruptcy, one notable change is the increase of the maximum debt threshold for the Debt Repayment Scheme to S$150,000 from S$100,000.

Provisions largely retain the repealed Bankruptcy Act, following significant amendments to the latter in 2015.

As for corporate debt restructuring and insolvency, the Act introduces new features including restriction on certain contractual rights triggered when restructuring proceedings start.

The Act will also enlarge the range of causes of action which may be funded by third parties, specifically certain officeholder avoidance actions - which may not be pursued due to lack of funds.

Lastly, the Act will introduce a summary procedure to dissolve companies with insufficient assets to pay for the administration of the winding up. The Act will establish a new licensing and regulatory regime for insolvency practitioners. This includes a set of requirements for the grant and renewal of an insolvency practitioner's licence; as well as common and minimum standards of professional conduct.

The Act builds on the 2017 amendments to the Companies Act, which enhanced Singapore's corporate rescue and restructuring framework.

Looking ahead, MinLaw is considering further temporary measures, in addition to the processes in the Act, to assist micro and small companies which may need support to either restructure their debts or wind down their businesses due to the Covid-19 pandemic.