Insolvency, Restructuring and Dissolution Act 2018 amended on 1 November 2023 to mandate appointment of private trustees in bankruptcy cases and extend Simplified Insolvency Programme

29 November 2023

From 1 November 2023, the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) is amended to mandate that all cases, except those of public interest (such as one that involves the misuse of public funds, significant debts owed to the Government or unpaid taxes), be administered by private trustees in bankruptcy (“PTIBs”). A person applying to the court for a bankruptcy order will be required to nominate a licensed insolvency practitioner to act as the PTIB. The applicant must obtain written consent from the licensed insolvency practitioner to administer the bankruptcy case before applying to the court.

PTIBs will be appointed to act as trustees in all bankruptcy cases, save for cases where the Official Assignee (“OA”) consents to be appointed as the trustee in bankruptcy. The OA will provide consent only in cases where the OA considers there to be public interest in the bankruptcy administration. However, this does not mean that the OA will consent to act as the trustee in every case where there might be elements of public interest.

The court must not make a bankruptcy order if a PTIB or the OA has not consented to act as the trustee in bankruptcy.

The new PTIB-administered bankruptcy regime applies to bankruptcy orders made by the Singapore High Court in bankruptcy applications filed on or after 1 November 2023. Since August 2016, it has been mandatory for PTIBs to administer bankruptcy estates in cases where specific types of creditors, such as banks, apply for bankruptcy orders. From 1 November 2023, under the new PTIB regime, this will extend to cases where debtors and all types of creditors apply for bankruptcy orders.

Set out below are relevant subsidiary legislation which also came into operation on 1 November 2023:

  • Insolvency, Restructuring and Dissolution (Personal Insolvency) (Amendment) Rules 2023
  • Insolvency, Restructuring and Dissolution (Bankruptcy) (Amendment) Regulations 2023

For more about the PTIB regime, please read our previous article titled “Insolvency, Restructuring and Dissolution (Amendment) Bill passed to mandate appointment of private trustees in bankruptcy cases and extend Simplified Insolvency Programme”.

Extension of Simplified Insolvency Programme to 2026

The IRDA is also amended from 1 November 2023 to extend the periods of application of Parts 5A (Simplified Restructuring of Debts) and 10A (Simplified Winding Up) of the IRDA, respectively, from three years to five years (beginning on 29 January 2021). In short, the validity period of the Simplified Insolvency Programme (“SIP”) has been extended to 28 January 2026. By way of background, the SIP was established on 29 January 2021 to provide simpler, faster, and lower-cost proceedings to assist micro and small companies (“MSCs”) in need of winding up or restructuring through either a Simplified Debt Restructuring Programme or a Simplified Winding Up Programme. The initial application period for the SIP was from 29 January 2021 to 28 July 2021. For more information, please read our article titled “Covid-19: Simplified Insolvency Programme available from 29 January 2021”. The application period for the SIP was then extended to 28 July 2022. Please refer to our article titled “Covid-19: Application period for Simplified Insolvency Programme extended to 28 July 2022” for more information. The application period for SIP was further extended to 28 January 2024 and this was covered in our article titled “Application period for Simplified Insolvency Programme extended to 28 January 2024”.

On 22 November 2023, in a speech at the Singapore Insolvency Conference 2023, the Minister for Culture, Community and Youth and Second Minister for Law Edwin Tong SC spoke about looking at potential changes to make SIP permanent and tailored for MSCs.

Reference materials

The following materials are available on the Ministry of Law website www.mlaw.gov.sg and Singapore Statutes Online website sso.agc.gov.sg: