Insolvency generally defines the incapacity of a legal entity to pay its debts. When a company cannot pay its dues, its creditors can declare it insolvent through a court. The court usually appoints an officer which evaluates the situation of the company, resulting in either a restructuring of the business or in its liquidation. The main focus of insolvency laws worldwide, including in Singapore, in the present is to generate a restructuring of the financial and organizational configuration in order to allow the rehabilitation and continuation of the business, not necessarily its liquidation. Our accountants in Singapore can provide more details on this subject.
The Companies Act and the Bankruptcy Act in Singapore
Currently, the legal framework for corporate insolvency, liquidation, judicial management, receivership and structuring schemes in Singapore is set out by the Companies Act.
In the same time, the bankruptcy of individual debtors, the process for individual voluntary arrangements and debt repayment plans are provided by the Bankruptcy Act.
The insolvency rules, as well as the avoidance provisions, the directive of insolvency practitioners and cross-border insolvency in Singapore are reviewed by the Insolvency Law Review Committee (ILRC) from within the Ministry of Law of Singapore.
Insolvency and Public Trustee’s Office in Singapore
The Insolvency and Public Trustee’s Office (IPTO) in Singapore is the department from within the Ministry of Law which manages the administration of individual and company insolvencies.
Company insolvency in Singapore
IPTO also functions to assist the public officer, named an Official Receiver (OR), to conduct his or her responsibilities as the liquidator of corporations which are forcibly wound-up (liquidated). The OR’s responsibilities include the investigation of the business of the company, the realization of the assets of the corporation, the adjudication of the claims of creditors and distribution of the assets of the corporation in compliance with the Companies Act.
Individual insolvency in Singapore
IPTO works to assist the public officer and the officer of the court (the Official Assignee) to exercise his or her duties in accordance with the Bankruptcy Act. IPTO roles include the realization of the bankrupt’s assets for the payment of the creditors, adjudication of the creditors’ entitlements and the payment of dividends to the creditors.
Please get in touch with our accounting firm in Singapore for more details about the insolvency law in Singapore or to receive a customized offer. We also offer professional GST registration services in Singapore.