New bill reduces insolvency filing costs, introduces streamlined criteria

Companies need to meet just one criterion.

Filing for insolvency will soon be simpler and more cost-effective as Singapore moves to revamp and make permanent the Simplified Insolvency Programme (SIP).

The government, through the Insolvency, Restructuring and Dissolution (Amendment) Bill, has put forward changes to the Simplified Debt Restructuring Programme (SDRP) and Simplified Winding Up Programme (SWUP) under the SIP.

Under the new proposal, SDRP and SWUP will each adopt a single eligibility criterion—companies must have total liabilities not exceeding $2m, a reduction from the previous four and five criteria.

The bill also provides a simple application process for financial-strained companies.

For the SDRP, only key supporting documents are initially required, though IPs may request additional documents to verify eligibility.

For the SWUP, companies with incomplete records can submit a Directors' declaration affirming eligibility, with enforcement measures in place to prevent false declarations.

The bill also provides that In the new SDRP, only one class of creditors will vote on the debt repayment plan, down from up to three, and court involvement is limited to disputed cases on specified grounds.

The SDRP allows transition to liquidation for unviable companies to streamline dissolution.

For the SWUP, costs are reduced by eliminating the need for publication in the Government e-Gazette and newspapers, requiring notices only on MinLaw’s website.

Lodgments will still be made on ACRA’s Bizfile for a permanent record.

If creditors do not fund investigations, the IP is not required to pursue further investigation and can complete liquidation to dissolve the company.

Lastly, the bill shortens the initial creditor moratorium in the SDRP to 30 days from 90 days and imposes a five-year restriction on reapplication if a company fails to complete the programme.