New Bill seeks to prescribe simpler way for small businesses to restructure debt or wind up

SINGAPORE: Pandemic-hit micro and small businesses will be able to tap on a new programme for simpler, faster and cheaper ways to restructure their debts or wind up, should a new Bill introduced in Parliament on Monday be passed.

While Singapore’s insolvency laws provide processes for companies with substantial assets, the solutions offered may not be suited for micro and small businesses. This is particularly for those that have depleted their resources as a result of the pandemic, it added. Micro and small companies are defined as those with an annual revenue of less than S$1 million and S$10 million, respectively. In 2018, there were about 207,000 micro enterprises and 44,000 small enterprises in Singapore.

Under the proposals for a simpler debt restructuring process, one application to the High Court will be required for a “pre-packaged” scheme of arrangement, instead of the usual two applications. For the proposed simplified winding up process, a company that opts for a creditors’ voluntary winding up process will not need to make a court application.

The SIP will be available for six months from the start of the proposed legislation, but the application period may be extended for a period determined by the minister, the Ministry of Law said.

Source: Loan Digest (loandigest.net)

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