Insolvency, Restructuring and Dissolution Act to commence on 30 July

It establishes a new licensing and regulatory regime for insolvency practitioners.

The Insolvency, Restructuring and Dissolution Act, together with its 48 related pieces of subsidiary legislation, will take effect on 30 July, the Ministry of Law (MinLaw) announced.

The Act is an omnibus legislation that consolidates Singapore’s personal and corporate insolvency and debt restructuring laws into a single piece of legislation and updates relevant laws to be aligned with international best practices.

Building on the Companies Act amendments in 2017, this legislation claims to benefit businesses experiencing financial difficulties as well as their creditors, create new opportunities for insolvency professionals (including lawyers and accountants), distressed debt funds and financial institutions, and further strengthen Singapore as an international centre for debt restructuring.

On personal bankruptcy, the provisions largely retain the repealed Bankruptcy Act, following significant amendments to the latter in 2015. One noteworthy change is the increase of the maximum debt threshold for the Debt Repayment Scheme from $100,000 to $150,000.

Whilst on corporate debt restructuring and insolvency front, the act introduces new features, including a restriction on certain contractual rights that are triggered upon the start of restructuring proceedings, enlarging the range of causes of action which may be funded by third parties and summarises procedure to dissolve companies that have insufficient assets to pay for the administration of the winding up.

The act also establishes a new licensing and regulatory regime for insolvency practitioners, requiring insolvency practitioners to uphold professional standards when performing insolvency and debt restructuring work in Singapore.