Private trustees to handle all bankruptcy cases, except those of public interest, under new Bill

PRIVATE trustees could administer all bankruptcy cases, except those of public interest, if an amendment Bill proposed by the Ministry of Law (MinLaw) is passed.

The Insolvency, Restructuring and Dissolution (Amendment) Bill was tabled for First Reading in Parliament on Monday (Nov 28). If passed, the new regime is expected to be implemented by September next year, MinLaw said on the same day.

Private trustees in bankruptcy (PTIB) can be a solicitor or a public or chartered accountant, and they must hold an insolvency practitioner licence.

Since 2016, MinLaw has required institutional creditors (IC) that file bankruptcy applications to appoint PTIBs instead of the official assignee (OA) to administer these cases, and from the following year, PTIBs have been handling over half the new bankruptcy cases on average.

MinLaw noted that this is also currently practised in jurisdictions such as the United States and Canada.

Under such a regime, public resources would not be spent on helping creditors in enforcing their private debts and debtors who seek a safe harbour from creditors, said MinLaw.

The OA would take on a more “regulatory role” to ensure PTIBs’ competencies and legislative compliance in case administration, it added.

“This will enable public resources in administering bankruptcy cases to be more effectively and efficiently utilised whilst ensuring that bankruptcy cases continue to be discharged in an orderly manner in Singapore,” said the ministry.

If a case is of public interest, such as one that involves the misuse of public funds, significant debts owed to the government or unpaid taxes, MinLaw said the OA may consent to act as the trustee in the bankrupty case.

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Such public interest cases are estimated to constitute only about 1 per cent of the annual caseload.

So far, industry feedback indicates that the experience of PTIBs handling bankruptcy cases filed by ICs has been smooth, MinLaw noted.

It also proposed several other miscellaneous amendments to enhance the protection of persons dealing with bankrupts in commercial transactions and provide continued support to the PTIB industry.

This includes making information on current employment status and history provided by undischarged bankrupts to the OA searchable with a fee.

It would also be an offence for undischarged bankrupts to not disclose their bankruptcy status when they receive a deposit of at least S$10,000 from any person.