Bankruptcy in Singapore
When a person becomes insolvent, or is unable to repay his debts to his creditors, the creditors may decide to institute bankruptcy proceedings against him.
A Bankruptcy Order will allow the Official Assignee appointed by the Court to administer the estate of the debtor and distribute such property as fairly as possible amongst the debtors.
A creditor can file for the debtor’s bankruptcy. Alternatively, the debtor himself can also file for bankruptcy. A petitioning creditor or debtor can begin bankruptcy application, if the debtor:
- Has property in Singapore
- Resides in Singapore
- Resides in, or carried on business in Singapore, one year before the bankruptcy application
- Owes a sum of money exceeding $15,000, payable immediately and enforceable in Singapore
- Is unable to pay the debt
If the debtor is the applicant, he must provide proof that he is unable to pay the debt. Similarly, if the creditor is the applicant, he will also need to prove that the debtor’s liabilities exceed his assets. The presumption of inability to pay arises when the following is satisfied, in accordance to section 62 of the Bankruptcy Act:
- The debtor failed to comply with a statutory demand to pay the debt
- The debtor failed to comply with a court issued execution to pay the debt
- The debtor has fled the country to avoid repayment
- The Official Assignee certifies that the debtor is unable to pay the debt
After the Court grants the application, the bankrupt must submit a statement of his assets, liabilities and creditors. Failure to do so can result in imprisonment or a fine. The Official Assignee will then sell off his assets.
The bankrupt can also make an offer of composition or a scheme of arrangement to pay his debts (usually a certain percentage of his debts, in monthly instalments) to his creditors. The creditors can decide whether to accept such offers.
After selling off the debtor’s assets, the dividends will be paid by the Official Assignee to the creditors who have provided proof of the debts.
If the debts have been fully repaid, or if the creditors reach an agreement with the debtor, the Bankrupt can then apply for annulment of his bankruptcy status. Otherwise, the bankrupt must continue to render an account of all his assets (for example, his monthly income) to the Official Assignee.
He will be allowed to retain a certain reasonable amount for maintenance of himself or his family. The remainder must be given to the Official Assignee for repayment to his creditors.