30 January 2023
On 9 January 2023, the Insolvency, Restructuring and Dissolution (Amendment) Bill (“Bill”) was passed in Parliament. Tabled for first reading in Parliament on 28 November 2022, the Bill seeks to propose changes to the bankruptcy regime under the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”). When in force, the Bill will mandate that bankruptcy cases, except those of public interest (such as one that involves the misuse of public funds, significant debts owed to the Government or unpaid taxes), be administered by private trustees in bankruptcy (“PTIBs”). The new regime under the Bill is expected to be implemented by September 2023.
Set out below is a summary of the key PTIB-related amendments as highlighted by the Second Minister for Law Edwin Tong, SC in the second reading speech on the Bill.
Mandate appointment of PTIBs in bankruptcy cases
- Sections 36(1) and (2) of the IRDA will be amended to mandate the appointment of PTIBs to act as trustees in all bankruptcy cases, save for cases where the Official Assignee (“OA”) consents to be appointed as the trustee in bankruptcy. Moving forward, the OA will provide consent only in cases where the OA considers there to be public interest in the bankruptcy administration. However, this does not mean that the OA will consent to act as the trustee in every case where there might be elements of public interest.
- There will be a new section 318A to provide that the court must not make a bankruptcy order if a PTIB or the OA has not consented to act as the trustee in bankruptcy.
Improve operational flexibility for determination of PTIBs’ remuneration
To simplify the process for determining PTIBs’ remuneration and keep the costs of bankruptcy administration low, the IRDA will be amended to provide for an additional means of determining PTIB’s remuneration, via agreement between the PTIB and all the creditors:
- The creditors will be deemed to have agreed if they have not objected to the remuneration sought by the PTIB in the prescribed manner and within the prescribed time.
- The creditors’ rights to object to such remuneration will be preserved.
- If the creditors object, PTIBs will have to secure either a special resolution at a creditors’ meeting or they will have to go to court for approval.
Enhance protection of persons dealing with bankrupts in commercial transactions
- Under the revised IRDA, it will be an offence for an undischarged bankrupt to receive a deposit (i.e. an advance payment for the supply of goods or services which can be in the form of money, or other in-kind consideration) of at least S$10,000 from any such person, if he or she does not disclose his or her bankruptcy status to that person. It is immaterial whether the individual receives the deposit in his or her own account, or on the account of another person. The Minister for Law may exempt any person or class of persons from this new offence by order in the Gazette.
- The amended IRDA will also allow the public to obtain information that undischarged bankrupts have submitted to the OA regarding their current employment status and employment history.
These two amendments will also apply and be in force against those whose bankruptcy orders were made under the repealed Bankruptcy Act.
Extend the Simplified Insolvency Programme for an additional two years
- The Bill also seeks extend the validity period of the Simplified Insolvency Programme (“SIP”) for an additional two years, to 28 January 2026.
The Ministry of Law is also reviewing the SIP with a view to make certain features permanent.