SINGAPORE - Private trustees will administer all bankruptcy cases in Singapore except those of public interest, if an amendment Bill tabled by the Ministry of Law on Monday is passed by Parliament.
The Insolvency, Restructuring and Dissolution (Amendment) Bill would simplify, expedite, modernise and cut the cost of insolvency procedures, said Second Minister for Law Edwin Tong in the second reading of the Bill.
He said the amendments in the Bill, which incorporate the latest practices in jurisdictions such as the United States and Canada, will further boost Singapore as a destination of choice for corporate debt restructuring.
The exception in the new bankruptcy regime would be cases of public interest – such as the misuse of public funds, significant debts owed to the Government or unpaid taxes. In such cases, an official assignee (OA) may consent to act as the trustee in the bankruptcy case.
However, such public interest cases are estimated to constitute only about 1 per cent of the annual caseload, according to the Ministry of Law.
Since 2016, the ministry has required institutional creditors (ICs) that file bankruptcy applications to appoint private trustees in bankruptcy (PTIBs) instead of an OA to administer these cases. From 2017, PTIBs have been handling more than half the new bankruptcy cases, on average.
A new framework was also introduced to streamline the process with clear timeframes and conditions for bankrupts to be discharged. So far, industry feedback has indicated that the experience of PTIBs in handling bankruptcy cases filed by ICs has been smooth.
“These changes have helped to streamline and improve the quality of bankruptcy administration, while at the same time ensuring that public resources can be better utilised,” said Mr Tong.
In that light, the Bill will introduce changes to the bankruptcy regime mandating that PTIBs should administer all bankruptcy cases, except those which the OA will decide to administer, having regard to public interest, Mr Tong said.
To support the shift towards a fully PTIB-administered bankruptcy regime, the Bill introduces an amendment to improve operational flexibility in determining PTIBs’ remuneration. The Bill also contains miscellaneous amendments that seek to enhance protection of persons dealing with bankrupts.
A PTIB can be a solicitor or a public or chartered accountant, and must hold an insolvency practitioner licence.
The amendments in the Bill seek to ensure that public resources are not spent on helping creditors in enforcing their private debts and debtors who seek a safe harbour from creditors, said Mr Tong. It also proposes several other miscellaneous amendments to enhance the protection of persons dealing with bankrupts in commercial transactions and provide continued support to the PTIB industry.
After the second reading of the amendment, some MPs, including Mr Murali Pillai, Ms Sylvia Lim, Mr Louis Ng, Mr Zhulkarnain Rahim and Mr Vikram Nair, pointed out improvements and shortcomings in the proposed bankruptcy regime.
Mr Tong, in response, assured them that their feedback will be taken into account in the ongoing review of the bankruptcy regime in Singapore.
