Knowledge Highlights 19 August 2021
The application period for the Simplified Insolvency Programme (“SIP”) has been extended from 28 July 2021 to 28 July 2022 pursuant to the Insolvency, Restructuring and Dissolution (Extension of Prescribed Periods for Parts 5A and 10A) Order 2021, which came into force on 29 July 2021. Financially distressed micro and small companies (“MSCs”), where eligible, may thus continue to apply for the SIP. If accepted, MSCs and their stakeholders will benefit from simpler, faster and lower-cost insolvency proceedings, which seek to optimise resources and potentially maximise returns to creditors.
The Ministry of Law (“MinLaw”) in its press release of 26 July 2021, available on the MinLaw website www.mlaw.gov.sg, stated that the application period for the SIP has been extended because the business environment continues to be challenging for some sectors due to an uncertain global outlook and changes to safe management measures to reduce risk of Covid-19 transmissions in Singapore, even as Singapore transitions towards an endemic Covid-19 situation. MSCs that have relied on industry-wide support measures by the Singapore Government and financial industry may also face financial headwinds in the coming months as temporary relief measures taper off.
By way of background, the SIP was established on 29 January 2021 following an amendment to the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”). As the IRDA generally provides processes for companies with substantial assets, the solutions offered may not be well suited for distressed micro and small businesses, particularly those that have depleted their resources as a result of the Covid-19 pandemic. The initial application period for entry into the SIP was from 29 January 2021 to 28 July 2021. For more, please read our previous article titled “Simplified Insolvency Programme available from 29 January 2021”. There is also an SIP FAQ page on the MinLaw Insolvency Office website io.mlaw.gov.sg which provides information on, among other things, the eligibility criteria and application process.
In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at email@example.com.