Between 16 January 2015 and 24 February 2015, the Ministry of Law (the “MinLaw”) conducted a public consultation to seek feedback on proposed amendments to the Bankruptcy Act (the “Act”) which principally sets out Singapore’s bankruptcy regime. Set out below is a summary of the key proposed amendments.
Institutional creditor must appoint private trustee
Currently, although the Act provides for the appointment of private trustees in bankruptcy, theOfficial Assignee (the “OA”) is still the party that administers the vast majority of bankruptcies in Singapore. There is no requirement that mandates the appointment of a private trustee to administer the bankruptcy. One of the key proposed amendments to the Act is to make it mandatory for an “institutional creditor” who brings a bankruptcy application to nominate a private trustee to administer the bankruptcy.
An “institutional creditor” refers to:
- A bank licensed under the Banking Act;
- A finance company licensed under the Finance Companies Act; or
- An undertaking having an annual sales turnover of more than S$100 million and having more than 200 employees.
Differentiated discharge framework
Another key proposed amendment to the Act is the introduction of a differentiated discharge framework in addition to the present method of discharge by a court order. Essentially, “first-time bankrupts” (i.e. persons who have not been made bankrupt previously) will generally be eligible for discharge in five to seven years. “Repeat bankrupts” (i.e. persons who have previously been discharged from bankruptcy) will generally be eligible for discharge in seven to nine years.
The intention behind this proposed amendment is to introduce a more rehabilitative regime to allow bankrupts to be discharged within clear time frames, where justifiable. The differentiated discharge framework will also allow bankrupts to have greater control over their eligibility for discharge.
The other proposed amendments to the Act include the increase in the debt threshold for bankruptcy from S$10,000 to S$15,000, increase of the time frame, from six months to 12 months, for a secured creditor to realise his security to qualify for post bankruptcy interest to be claimed on the security and the incorporation of some of the recommendations of the Insolvency Law Review Committee Report. Miscellaneous and technical amendments to the Act will also be made.
The following materials are available from the MinLaw website www.mlaw.gov.sg: