Insolvency, Restructuring and Dissolution (Amendment) Bill introduced to mandate administration of bankruptcy cases by private trustees in bankruptcy

20 December 2022

On 28 November 2022, the Insolvency, Restructuring and Dissolution (Amendment) Bill (“Bill”) was tabled for first reading in Parliament. The Bill seeks to propose changes to the bankruptcy regime under the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) to mandate that all 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”). If passed, the new regime is expected to be implemented by September 2023.

The following is a summary of the key proposed changes to the IRDA:

  • When making a bankruptcy order, the General Division of the High Court (“court”) may appoint a person other than the Official Assignee (“OA”) to be the trustee of the bankrupt’s estate, regardless of whether the application for bankruptcy was made by a creditor or a debtor. Currently, the court may only do so on the application of the creditor who applied for the bankruptcy order.
  • After a bankruptcy order is made, the bankrupt may apply to the court for the appointment of a person other than the OA to be the trustee of a bankrupt’s estate. Currently, only a creditor, the OA or any existing trustee of the bankrupt’s estate may so apply.
  • Any person applying for a bankruptcy order must apply to the court for the appointment of a person other than the OA to be the trustee of the bankrupt’s estate, unless the OA has consented to be the trustee of the bankrupt’s estate. Currently, only an institutional creditor is required to appoint a private trustee to administer the bankruptcy when applying to make a debtor bankrupt.
  • In the absence of an agreement with the creditors’ committee or where there is no such committee, the remuneration of a trustee in bankruptcy may be determined by agreement between the trustee in bankruptcy and all the creditors (as an alternative to a special resolution of the creditors). A creditor is deemed to have agreed if the creditor does not object to a remuneration proposed by the trustee in bankruptcy within a prescribed time and in a prescribed manner.
  • The court must not make a bankruptcy order if no licensed insolvency practitioner has consented to act as the trustee of the bankrupt’s estate, and the OA has not consented to act as the trustee of the bankrupt’s estate.
  • It is an offence for an undischarged bankrupt to receive money or other consideration of at least S$10,000 (or such higher amount as may be prescribed) from a person that is advance payment for the supply of goods or services, without informing that person, at the time the money or other consideration is received, that the individual is an undischarged bankrupt. It is immaterial whether the individual receives the money or other consideration on the individual’s own account or on account of another person. It is also immaterial whether the money or other consideration is received as full or partial payment.
  • Information provided by undischarged bankrupts to the OA about their current employment status and employment history will be publicly searchable (upon the payment of a prescribed search fee).
  • The Bill will also extend the periods of application of Parts 5A (Simplified Restructuring of Debts) and 10A (Simplified Winding Up) of the IRDA, respectively, from three years to five years (beginning on 29 January 2021).

With the new PTIB-administered regime, the OA will take on a more regulatory role to ensure the PTIBs’ competencies and legislative compliance in case administration. The OA will continue to administer undischarged bankruptcy cases that were assigned to or handled by the OA before these amendments take effect.

According to press release issued by the Ministry of Law (“MinLaw”), further information on the PTIB-administered regime and miscellaneous amendments will be released closer to the date of implementation.

Reference materials

The following materials are available on Singapore Statutes Online sso.agc.gov.sg and the MinLaw website www.mlaw.gov.sg: