Singapore Bankruptcy Law PDF

Takeaways Bankruptcy applications can be made by creditors or debtors themselves, and must meet certain criteria. The alternatives to bankruptcy include the Individual Voluntary Arrangement (IVA) and Debt Repayment Scheme (DRS). Bankruptcy administration involves the role of the official assignee...

Takeaways Bankruptcy applications can be made by creditors or debtors themselves, and must meet certain criteria. The alternatives to bankruptcy include the Individual Voluntary Arrangement (IVA) and Debt Repayment Scheme (DRS). Bankruptcy administration involves the role of the official assignee or private trustee in managing the bankrupt\'s affairs. A bankruptcy order can be discharged or annulled through various means, such as repayment of debts or obtaining a court order. Andrew Yip (00:02.029) this lecture, we will cover the following sections. First, how a bankruptcy application is made and the consequences of a bankruptcy order. Second, the alternatives to bankruptcy. Third, aspects of bankruptcy administration. And finally, how a bankruptcy order can be discharged or Andrew Yip (00:25.902) The relevant legislations governing the law of bankruptcy in Singapore are the Insolvency Restructuring and Dissolution Act 2018, ERDA, and the Insolvency Restructuring and Dissolution, Personal Insolvency Rules 2020. First, there must be jurisdiction over the debtor before an application for bankruptcy order can be made against him. Section 310 subsection 1 provides an exhaustive list of circumstances under which the Singapore court will have jurisdiction over the debtor if the debtor is either a. Domiciled in Singapore b. Has property in Singapore c. ordinarily resident or has a place of residence in Singapore one year before the bankruptcy application, or D, has carried on business in Singapore one year before the bankruptcy application was made. For an elaboration of what it means for the debtor to be domiciled in Singapore, please refer to the English case of Ree Johnson Roberts and Attorney General, and the Singapore High Court decision of Algemeen Ibank, Nettlen, and Lu Chun An application for a bankruptcy order can be made by either the creditor or the debtor himself. The creditor\'s application is governed by Section 307, while the debtor\'s self -application is governed by Section 308. A bankruptcy order must be supported by one of the grounds exhaustively contained under Section 311. First, the amount of the debtor or the aggregate amount of the debts must not be less than \$15 ,000. Second, the debt must be for a liquidated sum payable to the applicant creditor immediately. Third, the debtor must be unable to pay his debts. Andrew Yip (02:24.878) Section 311, subsection 1c and section 312 create a presumption of inability to pay debts upon the happening of certain events, such as the non -compliance of a statutory demand. The statutory demand procedure is commonly resorted to as a means of proving the inability of the debtor to repay his debts for the purposes of a creditor\'s bankruptcy application. The presumption of a debtor\'s inability to pay arises when a debtor fails to make a payment within 21 days of receipt of the statutory demand. The form of the statutory demand and the particulars and information that need to be included can be found under rules 73, 64 and 65. The manner of service of the SD statutory demand is commonly found under the rule 66 and the procedure for making an application to set aside SD is found in rule 67. Finally, the fourth ground under section 311 of the Urda, when the debt of each of the debts is incurred outside Singapore. Such debt must be payable by the debtor to an applicant creditor by virtue of a judgment or award, which is enforceable in Singapore. Andrew Yip (03:44.909) Please note the expedited procedure under Section 314. A creditor may file a bankruptcy application before the expiry of the 21 -day statutory demand period if a. There is a serious possibility that the debtor\'s property or the value of all or any of the debtor\'s property will be significantly diminished during that period, and b. The application contains a statement to that effect. A bankruptcy order will be advertised and published in the Gazette. This is stated in Rules 109 and 110. Pursuant to Section 326, the commencement date of bankruptcy is the date the bankruptcy order is made against a debtor and continues until he is discharged. Andrew Yip (04:34.093) Section 327 provides for the effects of a bankruptcy order. On the making of a bankruptcy order, the property of the debtor shall vest in the official assignee. A creditor cannot prove a debt in bankruptcy unless the creditor files proof of a debt within four months after the administration date of bankruptcy. The administration date is defined under Section 273 as the date of submission by the bankrupt of the Statement of Affairs or where the bankrupt is directed by the official assignee to submit supplementary information, the date of submission of the supplementary information if later. Andrew Yip (05:14.989) The bankrupt also has duties and obligations to follow. Upon making of a bankruptcy order, a bankrupt is under a general duty to assist the official assignee in identifying and recovering property of the bankrupt\'s estate. His statutory duties are expressed under Section 399. A bankrupt is further required to file his Statement of Affairs under Section 332, Subsection 1, and to submit his accounts as and when directed to do by the official assignee under section 333. Under section 6 of section 3, the OA may apply to the court for an order that the bankrupt comply with his duties, or the directions given to The bankrupt faces various statutory restrictions under the Bankruptcy Act, including the following. Pursuant to Section 400. A bankrupt cannot be a trustee or personal representative except with leave of court pursuant to Section 401, Subsection 1A. A bankrupt cannot maintain an action without the previous sanction of the OA, other than an action for damages in respect of injury to his person. See the case of Standard Chartered Bank against Lo Chong Yong Thomas. Pursue into Section 401 and Subsection 1B. The bankrupt cannot leave Singapore without the permission of the OA. Pursue into Section 412, Subsection 1A. The bankrupt cannot incur credit exceeding \$1000 without informing the person from whom he was obtaining credit that he is an undischarged bankrupt. Pursue into Section 148, Subsection 1 of the Companies Act. The bankrupt cannot be a director of a company as well. Andrew Yip (07:07.949) We have just covered the law on how a bankruptcy application is made, and very briefly the effects of a bankruptcy order. We now deal with the second section of this lecture, the alternatives to bankruptcy. One alternative to bankruptcy is the Individual Voluntary Arrangement or IVA. Part 14 of the order allows debtors to enter into binding voluntary arrangements with their creditors in respect of this debt repayment. The IVA avoids bankruptcy proceedings against the debtor. However, under Section 275, undischarged bankrupts are not allowed to enter into such voluntary arrangements. To commence on IVA, the debtor should apply to the court by way of an originating summons. Under Sections 276 -279, the court may grant an interim order if it is satisfied that The debtor intends to make a proposal for voluntary arrangement. 2. Nominee appointed by the debtor to supervise a voluntary arrangement is qualified and willing to act. 3. It will be appropriate to do so to facilitate the consideration and implementation of the debtor\'s proposal. The interim order acts as a stay of proceedings against the debtor. The order is only valid for 42 days unless extended. Under Section 277, No person may be appointed as a nominee unless that person is a licensed insolvency practitioner. Pursuant to Section 280, the debtor is required to submit to the nominee the terms of the voluntary arrangement that he is proposing and the statement of his assets, liabilities, and affairs. Sections 280 -281 govern the nominee\'s report and accreditor\'s meeting. The nominee will inform the court that accreditor\'s meeting should be convened to consider the debtor\'s proposals. If the court is satisfied that the creditor\'s meeting should be summoned, it will extend the interim offer. At the creditor\'s meeting, the nominee will report to the court whether or not the debtor\'s proposal has been approved by the creditors. If the proposal is approved by the creditors, Andrew Yip (09:27.329) the nominee will proceed to implement it. If it is not approved, the interim order will be discharged and creditors can proceed against the Besides the IVA, the other alternative to bankruptcy is the DRS. The DRS involves the debtor paying office creditors in accordance with a debt repayment plan. To be eligible for DRS, a debtor\'s total liabilities cannot exceed \$150 ,000. The debtor must not be bankrupt or under any voluntary arrangement within a period of five years. immediately preceding the date on which the bankruptcy application is made. The debt term must not be subject to any debt repayment scheme, and must not have been subject to any such debt repayment scheme at any time within a period of five years. Immediately preceding the date on which the bankruptcy application is made, the debt term must not be a sole proprietor, a partner of a firm, or a partner in a limited liability partnership. Andrew Yip (10:33.197) If the official assignee or OA reports to the court that the debtor is unsuitable for DRS, the court will allow the creditor to proceed bankruptcy application against the debtor. Section 293 provides that a moratorium shall apply during the period of implementation of a DRS. However, the right of any secured creditor to realize or deal with this security is not affected by the moratorium. The debtor shall be issued a certificate of completion under Section 301 if he repays his debts in accordance with the Debt Repayment Plan. So what is an official assignee? The person responsible for the administration of the bankrupt\'s affairs is either the official assignee or a private trustee. From 1st November 2023, private trustees in bankruptcy administer bankruptcy estates in all cases, save for those where the official assignee considers there is public interest and consents to be appointed as the trustee in bankruptcy. This applies when bankruptcy orders are made by the Singapore High Court in Bankruptcy Applications, filed on or after 1 November 2023. The new PTIB -administered bankruptcy regime will ensure that public resources are more effectively and efficiently utilised in the administration of bankruptcy estates. Pursuant to Section 327, subsection 1b, on the making of the bankruptcy order, The PT or OA shall be the receiver of the bankrupt\'s property and shall administer bankrupt\'s affairs in bankruptcy. The private trustee appointed under Section 36 plays an analogous role in bankruptcy to that of private liquidators in company\'s liquidation cases. Creditors can apply to the court for a private trustee to administer the bankrupt\'s estate. Section 37, subsection Andrew Yip (12:36.705) provides that only a licensed insolvency practitioner may be appointed as a private trustee in bankruptcy. Andrew Yip (12:48.141) Now, Rule 47 of the Personal Insolvency Rules describes four factors which must be considered when determining the trustee\'s remuneration. They are 1. The complexity of the case 2. Whether the responsibility that the trustee was required to assume in the administration of the bankruptcy estate was of an exceptional kind or degree 3. The effectiveness of the trustee\'s discharge of his duties and the value and nature of the assets in the Andrew Yip (13:23.917) Now we move on to Bankruptcy Administration. Pursuant to Section 327, Subsection 1A on the making of a Bankruptcy Order, the property of the bankrupt shall vest in the private trustees or official assignee. Please read Section 352 in detail for the order of distribution among the bankrupt\'s creditors. The bankrupt\'s estate consists of property belonging to the bankrupt at the time of the Bankruptcy Order. and property acquired by the bankrupt after his bankruptcy but before his discharge. Please read section 329 for a description of the bankrupt\'s property that is divisible among his creditors, section 51 of the Housing Development Act, section 24 of the CPF Act for assets of the bankrupt that cannot be realised. The official assignee or the private may also invoke the avoidance provisions under sections 361 and 362 to claw back assets that have been dissipated by the bankrupt by transactions that are undervalued and unfair preference transactions in order to enlarge the bankrupt\'s pool of assets for distribution amongst the bankrupt\'s creditors. The bankrupt may face penal consequences if he acts in contravention of his statutory duties or restrictions. We\'ll move on to dividend distribution. During the administration of the bankrupt\'s affairs, the private trustees or official assignee will collect the assets of the bankrupt for the purpose of distributing dividends to creditors. Section 385 requires the official assignee, when he has sufficient assets in his hands, to declare and distribute dividends among the creditors who have proved their debt. Please read Section 385 on dividend payments by the official Section 387 provides that official assignee may bring his administration to an end when he has realized as much of the estate as he is able to without needlessly protracting the proceedings in bankruptcy. Andrew Yip (15:31.277) We now deal with the fourth and final section of this lecture on how a bankruptcy order can be discharged or annulled. There are four main ways to cease being bankrupt. First, the bankrupt may obtain an annulment of a bankruptcy order by the court or the official assignee where the debts and expenses of the bankrupt have been fully repaid or secured to the satisfaction of the court. Please read section 392 subsection 1 for annulment by the and Section 393 for obtaining an annulment by the official assignee. Second, the creditors who approved their debts at a general meeting of creditors or by writing may, by special resolution, resolve to accept a complete settlement of the debts due to them under the bankruptcy, or for a scheme of arrangement of the bankrupt\'s affairs. Please read Section 357 for the specific requirements that must be satisfied. Third, pursuant to Section 394, the private trustees or official assignee, the bankrupt, or any person having an interest in the matter at any time after the making of a bankruptcy order, may apply to the court for an order of discharge of the bankruptcy order. Subject to section 394, subsections 4 and 5, the court may a. Refuse to discharge the bankrupt from bankruptcy, b. Make an order of discharging him absolutely, or c. Make an order discharging him, subject to such conditions as it deems fit, to impose. including conditions with respect to any income which may subsequently be due to him, or any property devolving upon him, or acquired by him after his discharge, as may be specified in the order. Fourth, pursuant to Section 395, the private trustees or official assignee may subject to 396, issue a certificate discharging a bankrupt from bankruptcy. Andrew Yip (17:29.101) First -time bankrupts and repeat bankrupts have different eligibility time periods, 3 -5 years after the administration date for the former and 5 -7 years after the administration date for the latter. The bankrupt will only be eligible for discharge provided certain conditions are met, such as paying their target contribution. Further creditors will have the opportunity to object to the discharge. A creditor who has been served with a notice of the OA\'s intention to discharge under Section 396, subsection 1, and who wishes to enter an objection to the OA, may, within 21 days, the date of the OA\'s notice, furnish the OA with a statement of the grounds of his objection. Please read Section 395 and 396 for a more detailed understanding.