SINGAPORE - All bankruptcy cases, except those of public interest, may soon be handled by private entities such as lawyers from September 2023.
The change will allow public resources to be better utilised instead of being used to help creditors enforce their private debts or to protect debtors from their creditors, said the Ministry of Law (MinLaw) in a statement on Monday.
The ministry on Monday proposed the Insolvency, Restructuring and Dissolution (Amendment) Bill in Parliament to improve bankruptcy administration while allowing public resources to be better utilised.
Currently, only institutional creditors are required to appoint private entities to handle their bankruptcy cases, a change that was introduced in 2016. The proposed move will extend the requirement to all creditors and debtors.
Under the proposed amendments, Private Trustees in Bankruptcy (PTIBs) will be appointed to handle all bankruptcy cases, including those filed by non-institutional creditors and debtors. PTIBs can be solicitors, public accountants, or chartered accountants, and have to hold an insolvency practitioner’s licence from MinLaw’s Insolvency and Public Trustee’s Office.
If the law is passed, the new regime is expected to be implemented by September 2023.
On the proposed change, MinLaw said: “This will enable public resources in administering bankruptcy cases to be more effectively and efficiently utilised whilst ensuring that bankruptcy cases continue to be discharged in an orderly manner in Singapore.”
It added that countries such as the United States and Canada already adopt this practice and make it compulsory that PTIBs be appointed for every bankruptcy case.
The official assignee, who is a public official and an officer of the court, may take up cases of public interest, such as those involving the misuse of public funds or significant debts owed to the Government. Such cases are estimated to comprise only about 1 per cent of the total number of cases per year.
MinLaw said that the proposed changes are part of its ongoing review of how bankruptcy cases are administered in Singapore, with changes already made to improve the process. Since 2017, PTIBs have been administering more than 50 per cent of new bankruptcy cases on average.
There have been 3,060 bankruptcy applications made from January to October 2022, with 801 orders made and 835 bankruptcy discharges for the period. In 2021, there were 3,160 applications for bankruptcy, and in 2020, 2,833 applications.
Based on feedback from the industry, the process of PTIBs administering bankruptcy cases filed by institutional creditors has been smooth, said MinLaw.
With the proposed change, the official assignee will now take on a more regulatory role and help to oversee the PTIBs’ competencies and compliance when handling the cases. The official assignee will continue to handle the undischarged bankruptcy cases assigned to him before these new amendments take effect.
Other changes proposed under the new Bill include making information provided by undischarged bankrupts to their trustees about their employment history and status publicly accessible with a fee. Another proposed change criminalises the non-disclosure of an undischarged bankrupt’s status when the person receives a deposit of at least $10,000 from any party, whether it is for himself or for another person.
More information on the proposed changes will be released closer to the date of implementation, MinLaw said.
On Monday, the Ministry of Education also proposed enhancements to the SkillsFuture Singapore Agency’s (SSG) investigative powers, as part of amendments introduced in two Bills. The proposed changes will allow SSG to take punitive action against errant parties who abuse the agency’s funding and misrepresent its funding and schemes. The agency would also be able to take actions like refunding monies to affected individuals and return disbursed funding to SSG.
- Additional reporting by Amelia Teng
