Business assets protected from repossession

Business assets such as machinery and commercial vehicles will be protected from repossession under the Covid-19 (Temporary Measures) Bill passed in Parliament yesterday.

Such assets will also be shielded from forfeiture if they were used as collateral by small and medium-sized enterprises (SMEs) to take out loans, and the SME is unable to repay the instalments due to the coronavirus pandemic.

SMEs will also be protected from court action, or the appointment of a receiver as a result.

Law and Home Affairs Minister K. Shanmugam told Parliament during the Bill's second reading that he had heard from various individuals, including tour bus owners and drivers, whose vehicles had been repossessed by financial companies.

"For those who have lost their vehicles, many families' lives (and) well-being are at stake, where the driver or owner of the bus is the sole breadwinner," he said.

"The aim of the Bill is to help them retain their business and their vehicles, where it makes sense to do so."

Commercial vehicles cannot be repossessed under the Act if relief is granted, said Mr Shanmugam.

However, if financial companies believe they can justify the repossession, they can state their position to a Law Ministry-appointed assessor who will make a "just and equitable" decision, he added.

The outstanding value of hire-purchase agreements related to motor vehicles at the end of last year is estimated to be $2 billion, said Mr Shanmugam.

During the debate of the Bill, Ms Joan Pereira (Tanjong Pagar GRC) said the new laws will give SMEs breathing room to revamp their businesses instead of worrying about their immediate future.

She expressed hope that bigger players such as landlords, banks and finance companies will continue to see their relationships with SMEs as a partnership.

"When the SMEs do well, they will also do well. I hope this understanding will underpin the future discussions that are needed between landlords and tenants, banks and borrowers, to chart a way forward," said Ms Pereira.

Labour MP Zainal Sapari (Pasir Ris-Punggol GRC) asked if the Bill will apply to buyers of services, such as security or cleaning, who may impose liquidated damages from any shortfall in standards due to manpower shortage.

Mr Shanmugam said in response that the Bill is not intended to be a general intervention in all contracts, but added that the Ministry of Law is prepared to include those contracts if the Labour MP can make a persuasive case that they have been affected significantly by Covid-19.

Join ST's Telegram channel and get the latest breaking news delivered to you.

A version of this article appeared in the print edition of The Straits Times on April 08, 2020, with the headline Business assets protected from repossession. Subscribe