Impact of COVID-19 (Temporary Measures) Act 2020 on Bankruptcy and Winding Up Applications

Part 3 of the COVID-19 (Temporary Measures) Act 2020 (“C19TMA”) provides temporary relief for financially distressed individuals, firms and other businesses by introducing modifications to, amongst others, the Bankruptcy Act, the Companies Act and the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) during the prescribed period of 6 months from 20 April 2020 to 19 October 2020 (the “Prescribed Period”).

Amongst others, the modifications:

  1. increased the period that shall have to elapse for the presumption of inability to pay to arise to 6 months, in relation to a statutory demand served on a debtor during the Prescribed Period;

     

  2. increased the monetary threshold for the bankruptcy of individuals and firms to $60,000 in bankruptcy applications made during the Prescribed Period;

     

  3. increased the monetary threshold for suitability for a debt repayment scheme to $250,000 for bankruptcy applications made during the Prescribed Period;

     

  4. increased the period that shall have to elapse before a company is deemed to be unable to pay its debts to 6 months, in relation to a demand served on a company during the Prescribed Period; and

     

  5. increased the monetary threshold for the winding up of companies to $100,000 in winding up applications made during the Prescribed Period;

After the Prescribed Period:

  1. the monetary thresholds as provided under the IRDA apply instead to or in relation to bankruptcy and winding up applications made after the Prescribed Period;

     

  2. the $250,000 threshold for suitability for a debt repayment scheme continues to apply to or in relation to bankruptcy applications made during the Prescribed Period;

     

  3. the 6 months that have to elapse for the presumption of inability to arise continue to apply to or in relation to a statutory demand served on a debtor during the Prescribed Period; and

     

  4. the 6 months that have to elapse before a company is deemed to be unable to pay its debts continue to apply to or in relation to a demand served on a company during the Prescribed Period.

The information provided below in respect of bankruptcy and winding up applications is subject to any modifications arising from the C19TMA and should be read together with those modifications, where applicable.

More information is available at

https://www.mlaw.gov.sg/covid19-relief/temporary-relief-individuals-businesses

You may also wish to refer to the FAQs at

https://io.mlaw.gov.sg/bankruptcy/covid-19-faq/

https://io.mlaw.gov.sg/debt-repayment-scheme/covid-19-faq/

https://io.mlaw.gov.sg/corporate-insolvency/covid-19-faq/