Amendments to make bankruptcy available only for debts of $15,000 or more

Singapore's bankruptcy process may soon be available only for debts of $15,000 and more, up from $10,000. -- ST PHOTO: DESMOND WEE
Singapore's bankruptcy process may soon be available only for debts of $15,000 and more, up from $10,000. -- ST PHOTO: DESMOND WEE

SINGAPORE - Singapore's bankruptcy process may soon be available only for debts of $15,000 and more, up from $10,000.

The move to change the bankruptcy debt threshold, last revised in 1999, is one of several proposals to amend the Bankruptcy Act.

The new threshold is based on the same income-related benchmarks and takes into account the effects of inflation, said the Ministry of Law in a press release on Friday.

The proposed amendment seeks to encourage debtors and creditors to resolve debts falling below the threshold, without resorting to the formal bankruptcy process, it added.

This will help debtors "avoid the inconveniences and stigma associated with bankruptcy".

The review was done to create conditions conducive to sustainable entrepreneurship and risk-taking, while preserving responsible debt management and ethical commercial conduct, the ministry said in its statement.

Another proposed amendment is the introduction of a "differentiated bankruptcy discharge framework".

Under current laws, bankruptcy administration can often be a lengthy process that does not necessarily benefit creditors, as bankrupts may not have an incentive to work toward their discharge, the ministry said.

A differentiated discharge framework will introduce a more rehabilitative regime that allows bankrupts, in justified cases, to be discharged within clear time frames.

Another proposed amendment will require an "institutional creditor" to nominate a private trustee to administer a bankruptcy.

Institutional creditors are defined as either banks and finance companies regulated by MAS, or businesses with annual turnover of more than $100 million and more than 200 employees.

Under the current Act, the Official Assignee (OA) administers the vast majority of bankruptcies in Singapore.

This amendment would allow the OA to focus its resources on administering cases where the applicant creditor is either an individual or a small business.

It would also emphasise the need for institutional creditors to play a more active role in the administration of bankruptcy and undertake better risk assessments before granting credit.

The ministry is inviting views from the public on the proposed amendments to the Act.

The consultation period is from Jan 16 to Feb 24. The feedback may be sent in electronic form to MLAW_Consultation@mlaw.gov.sg or in hard copy to the ministry.