SINGAPORE: In a move set to ease the financial burden on struggling businesses, Singapore is making it simpler and more cost-effective for companies to file for insolvency.
The government has introduced reforms to the Simplified Insolvency Programme (SIP), making the process more accessible and efficient for smaller companies.
Lower costs, simplifying the process
According to a Singapore Business Review report, under the Insolvency, Restructuring, and Dissolution (Amendment) Bill, two key initiatives—the Simplified Debt Restructuring Programme (SDRP) and the Simplified Winding Up Programme (SWUP)—will undergo significant changes to reduce complexity and costs for companies facing financial distress.
One of the key updates is the unification of eligibility criteria. The SDRP and SWUP will now require companies to have total liabilities of no more than $2 million, a substantial reduction from the previous multiple criteria.
This change is expected to widen access to these simplified processes, enabling more businesses to use these streamlined options for resolving insolvency.
The new bill also aims to simplify the application process.
For companies opting for the SDRP, only key supporting documents will be required at the outset, with the possibility of additional documentation requested by Insolvency Practitioners (IPs) for verification.
Streamlined transition
Meanwhile, for the SWUP, companies with incomplete financial records can now submit a director’s declaration confirming eligibility, with strict enforcement measures to deter false claims.
Additional changes to the SDRP include significantly reducing the number of creditors required to vote on the debt repayment plan, which dropped from three classes to just one.
Court intervention will be limited to cases where disputes arise based on clearly defined grounds.
The new system also introduces a streamlined transition to liquidation for companies deemed unviable during the debt restructuring process, making it easier to dissolve businesses that cannot recover.
The SWUP will also see cost savings.
Previously, companies were required to publish notices in the Government e-Gazette and newspapers.
Under the new rules, publication on the Ministry of Law’s website will only be necessary, reducing the administrative burden and associated costs.
The bill also includes changes to the creditor moratorium period in the SDRP, shortening the initial pause on creditor actions from 90 days to 30 days.
Moreover, companies that fail to complete the program will face a five-year restriction on reapplying, encouraging more efficient resolution of insolvency cases.
Strengthen SG’s position as int’l. business hub
These changes are part of Singapore’s broader efforts to enhance its insolvency and restructuring framework, ensuring businesses facing financial challenges have access to affordable, streamlined processes for recovery or orderly dissolution.
The reforms are expected to strengthen the country’s position as a global business hub by offering a more flexible, efficient system for dealing with financial distress.
With these proposed changes, Singapore is taking a significant step forward in modernizing its insolvency laws, creating a more conducive environment for businesses to navigate financial difficulties while ensuring greater transparency and accountability.