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Liquidation and Bankruptcy Law in Singapore
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Bankruptcy/Insolvency occurs when individuals, businesses and/or companies are unable to meet their financial obligations to their creditors. In situations as such, creditors may take out bankruptcy/insolvency proceedings against the person or company. Alternatively, the debtor too can file for bankruptcy. When a person is declared bankrupt, the court will usually appoint an Official Assignee to administer the bankrupt’s financial affairs in order to repay his creditors. The Official Assignee is a public servant and an officer of the court. Similarly, when a company is declared insolvent, the court will appoint an Official Receiver to wind up and liquidate the assets of the company in order to repay its creditors. Bankruptcy application can begin (by both the creditor or debtor) if the debtor:
1. Is a Singaporean resident
2. Owns property in Singapore
3. Maintained business in Singapore at least one years before the bankruptcy application
4. Owes money exceeding $10,000
5. Is unable to pay the debt
If the debtor makes the application, he will have to prove he is unable to pay the debt. If the creditor is the applicant, on the other hand, he will have to prove that the debtor has liabilities exceeding his assets. We know that bankruptcy can have detrimental effects whether you are a debtor or creditor and our lawyers are dedicated to helping you make your decisions in a way that advantages you the most.
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Bankruptcy as a Creditor or Debtor
At IRB Law, we recognize that applying for bankruptcy can be a frustrating affair but our Commercial lawyers are well versed in handling bankruptcy/insolvency applications and with their help, these feelings can be better managed. If you are facing bankruptcy proceedings or anticipate that your business or company is at risk of becoming insolvent, our lawyers will be able to assist in defending against bankruptcy/insolvency applications as well as other voluntary debt repayment schemes that help to avoid being bankrupt/insolvent.
Alternatively, if you are a creditor seeking to initiate bankruptcy or insolvency proceedings, our lawyers will provide you with sound legal advice on the merits and benefits of such an application, and act on your behalf throughout the proceedings.
Initiating Bankruptcy / Insolvency Proceedings
If you are a creditor, you may be concerned with recovering payments from your debtors. Commencement of bankruptcy proceedings may not guarantee the repayment of your debtor’s debts owed. Once a debtor is declared bankrupt, you may no longer take legal action to recover monetary claims from that arose before bankruptcy. Initiating bankruptcy/insolvency proceedings unfortunately require more than just proof of debt. It is necessary to demonstrate that the debtor’s liabilities exceed his assets before a bankruptcy application will be granted. Before commencing with the bankruptcy proceedings, a creditor should consider:
(a) The unlikelihood of recovering debts owed in full
(b) After the bankrupt has been released from bankruptcy, debts that have not been fully
repaid will be nullified and creditors will be unable to seek repayment
(c) The loss of interest of the principal sum owed
There exists several presumptions under the law that may assist you in proving that the debtor’s liabilities exceeds his assets. It may, for example, be more advantageous to issue your debtor a statutory demand as this will act as the referral for your debtor’s inability to repay his debt. Our commercial lawyers will carefully consider the circumstances and advise you with the best methods to approach a bankruptcy application.
Rights as a Creditor
If you are creditor, you receive the rights to your debtor’s property or goods and will be able to sell them if your debtor does not continue to meet due payments. If your debtor’s assets are worth more than the debt that is owed, any balance will be forwarded to the Official Assignee to be distributed to the bankrupt’s other creditors.
Our experienced lawyers will provide all this information to you and we will help you approach the matter in ways that will advantage you the most.
Defending Bankruptcy / Insolvency Proceedings
If you are a debtor and have found yourself unable to repay your debts, our lawyers will advice you on the schemes available that may be of assistance. For example, the debt repayment scheme allows the Official Assignee to step in and administer your finances so that your creditors can be repaid over a fixed duration. This benefits both yourself and your creditors as your creditors will get repaid, whilst you avoid the many additional restrictions and social stigma attached to being adjudged a bankrupt.
Similarly, companies facing financial difficulties may benefit from the Judicial Management scheme. This is a scheme that allows the company to continue operations as a going concern under the judicial managers oversight. The judicial manager may reorganize the affairs of the company so that the company’s debts are paid off without having to resort to the winding up of the company.
If your company is, or you are, facing financial difficulties, an early intervention may save you from bankruptcy or being wound up. At IRB Law, our experienced commercial lawyers are prepared to assist you in taking out the necessary applications. With us on your side, you will have advice on the best course of action to take and minimize the damages that can come with bankruptcy/insolvency.
Responsibilities as a Bankrupt
As a bankrupt, you must inform the Official Assignee (OA) of all the properties you possesses. You will also have to assist the OA in the selling and distribution of your properties. Although a bankrupt’s assets have been vested to the Official Assignee, you are still able to own a HDB flat. There are, however, restrictions in terms of travel. Before travelling, permission is required from the OA and if permission has not been obtained, you may be stopped at immigration and your passport impounded by the Immigration and Checkpoints Authority (ICA).
This is not an exhaustive list of responsibilities. Our lawyers at IRB Law can assist you with a comprehensive list of information of your rights and responsibilities after claiming bankruptcy. We will help manage your worries and assist you in your time of need.