SINGAPORE - Small and micro companies that have been hit hard by the Covid-19 pandemic and need to restructure their debts to stay viable or wind up their businesses can apply for support to do so under a new programme from Friday (Jan 29).
Applications for the Simplified Insolvency Programme (SIP) will be open until July 28 and the period may be extended if the need arises, the Ministry of Law (MinLaw) said on Thursday.
The SIP consists of two separate programmes which eligible companies can apply for.
One is the Simplified Debt Restructuring Programme (SDRP) for the restructuring of debts and the potential rehabilitation of viable businesses.
The other is the Simplified Winding Up Programme (Swup) for the orderly winding up of non-viable businesses.
Micro and small companies are defined as having annual revenue of less than $1 million and $10 million respectively. They account for about 95 per cent of enterprises in Singapore.
To qualify for the SIP, the number of creditors cannot exceed 50, and the number of employees cannot exceed 30.
The company's annual sales turnover must not exceed $10 million and its liabilities, including contingent and prospective liabilities, must not exceed $2 million.
For the Swup, the company's realisable unencumbered assets cannot be more than $50,000.
It cannot be a foreign company and it must not be in circumstances that make it unsuitable for the SIP, such as having started or being in other insolvency proceedings.
The application fee for both programmes under the SIP is $450, while the administration fee will be $18,750 for the SDRP and S$2,700 for the Swup.
Fees for additional services such as legal advice and valuation must be borne by the firm and paid directly to the service provider.
In addition, MinLaw said non-corporate businesses can tap the Sole Proprietors Scheme and Partnerships Scheme administered by Credit Counselling Singapore.
The ministry added that they can also make use of support measures introduced by the Monetary Authority of Singapore to help small and medium-sized enterprises deal with their short-term cash flow difficulties.
"The SIP forms part of a suite of Government measures to help businesses and our workforce emerge stronger from the Covid-19 pandemic," MinLaw said.
It added that the SIP complements existing Covid-19 relief measures and legal remedies such as the Re-Align Framework, which commenced on Jan 15 and allows small and micro businesses to renegotiate their contracts.