SIP FAQ

SIP FAQ

SIMPLIFIED INSOLVENCY PROGRAMME FAQ

QUESTIONS & ANSWERS

THE SIMPLIFIED INSOLVENCY PROGRAMME UNDER THE INSOLVENCY, RESTRUCTURING AND DISSOLUTION (AMENDMENT) ACT 2020

BACKGROUND

1. What is the Simplified Insolvency Programme (“SIP”)

The SIP aims to provide simpler, faster, and lower-cost proceedings to assist micro and small companies in need of winding up or restructuring. The SIP comprises two separate programmes:
a) Simplified Debt Restructuring Programme (“SDRP”) - Restructuring debts and potential rehabilitation of viable businesses; and
b) Simplified Winding Up Programme - Orderly winding up of non-viable businesses.

For a company under SDRP, the Restructuring Advisor acts as a single point of contact in dealing with multiple classes of creditors to i) develop a restructuring plan, ii) co-ordinate with the creditors to vote on the restructuring plan and iii) have the Court sanction the restructuring plan.

For a company with only 1 or 2 major creditor(s), it will be more cost-effective for the company to approach the major creditor(s) directly to negotiate a debt restructuring plan.

2. Why is there a need for the Simplified Insolvency Programme (“SIP”)?

The SIP seeks to provide simpler, faster, and lower-cost proceedings to assist micro and small companies which may be unlikely to have the resources to attempt to wind up or restructure their debts on their own.

3. When will the Simplified Insolvency Programme (“SIP”) commence?

The SIP will start on 29 Jan 2021.


APPLICATION - GENERAL

4. How can a company apply for the Simplified Insolvency Programme (“SIP”)?

A company may apply for the SIP by submitting a completed application form, together with the required documents and information, to the Official Reciever via the MinLaw website at https://eservices.mlaw.gov.sg/enquiry/

Please use the following application forms for respective programmes:
(a) Simplified Debt Restructuring Programme
(b) Simplified Winding Up Programme

5. Can a company apply for both the Simplified Debt Restructuring Programme (“SDRP”) and the Simplified Winding Up Programme (“SWUP”) at the same time?

No, a company may submit only one application at a time for either programme. For example, if a company has submitted an application for the SDRP, the company should not submit an application for the SWUP until it has been assessed to be unsuitable for the former. The company may then make a fresh application for the SWUP.

6. Will the creditors of a company be able to use the Simplified Insolvency Programme (“SIP”) to restructure the debts of the debtor company or to wind up the debtor company?

No, an application for the SIP is only open to applications from the company.

7. Are foreign companies eligible for the Simplified Insolvency Programme (“SIP”)?

The intent behind the SIP is to assist locally incorporated micro and small companies (“MSCs”) to restructure or wind up if they meet the statutory eligibility criteria. As the SIP is supported by limited public resources, non-locally incorporated, i.e. foreign MSCs will not be eligible for the SIP. Moreover, the restructuring or winding up of a foreign MSC (with assets and creditors overseas) is likely to render it unsuitable for the simplified processes of the SIP.

8. Are foreign-owned companies which are incorporated in Singapore eligible for the Simplified Insolvency Programme (“SIP”)?

A company which is incorporated in Singapore will be eligible for the SIP if they also fulfil the statutory eligibility criteria for acceptance. This is regardless of the fact that the company is foreign-owned.

9. What are the applicable fees and charges payable under the Simplified Insolvency Programme (“SIP”)?

The Applicant Company (“AC”) is required to pay to the Official Receiver (“OR”) (a) an application fee of $450 upon application, and (b) an administrative fee of $18,750 or $2,700 (as the case may be) upon acceptance into the Simplified Debt Restructuring Programme (“SDRP”) and Simplified Winding Up Programme (“SWUP”), respectively.

The other fees and charges may be payable by the AC after it is accepted into the SIP includes:
(a) Cost of obtaining legal advice on matters concerning the applicant company;
(b) Cost of publishing gazettes;
(c) Cost of making an application to the Court for sanction of the proposed scheme.

These fees will be paid directly by the AC to the service provider they have engaged.

The fee structure is summarised in the table below:

Applicable fees under the SIP SDRP SWUP
Application Fee
[To be paid upon submission of application.]		 $450 $450
Administration Fee
[To be paid to the OR in the form of a deposit to be accepted into the SIP.] 		$18,750 $2,700
Fees for additional services, e.g. legal advice, valuation etc.
[To be paid directly to the service provider.]		 To be borne entirely by the company as incurred.


10.What is the application period for the Simplified Insolvency Programme (“SIP”)?

Companies may apply for the programmes under the SIP from 29 January 2021 to 28 January 2026.

APPLICATION REQUIREMENTS - SIMPLIFIED DEBT RESTRUCTURING PROGRAMME

11. What are the requirements for acceptance into the Simplified Debt Restructuring Programme (“SDRP”)?

The Official Receiver (“OR”) may accept the company’s application for the SDRP if both the following requirements are met:
(a) The Applicant Company (“AC”) meets the eligibility criteria (set out below); and
(b) There is no circumstance (set out below) known to the OR that makes the AC unsuitable for acceptance into the SDRP.

Eligibility criteria to be fulfilled by AC
(a) Annual sales turnover not exceeding $10 million;
(b) Has not more than 30 employees;
(c) Has not more than 50 creditors;
(d) The liabilities of the company (including prospective and contingent liabilities) not exceeding $2 million; and
(e) Not a foreign company (i.e. the AC is incorporated in Singapore).

Circumstances affecting suitability for acceptance
(a) The AC is being wound up pursuant to:

  • an order for winding up of a company under section 216(2)(f) of the Companies Act (Cap. 50) (“CA”) (i.e. due to oppression or injustice);
  • an order for winding up made under section 124 of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) (or any previous written law corresponding to that provision) (i.e. winding up by Court);
  • a resolution passed for the winding up of the company under section 160 of the IRDA (or any previous written law corresponding to that provision) (i.e. voluntary winding up);

(b) The AC is in judicial management:

  • within the meaning of section 88(2) of the IRDA; or
  • pursuant to an application made under the repealed section 227B(1) of the CA;

(c) An application has been made by or in respect of the AC under any of the following provisions and the application is pending:

  • section 210(1), (4) or (10) of the CA (i.e. application to approve compromise with creditors, members and holders of units of shares);
  • section 64(1) of the IRDA (or any previous written law corresponding to that provision) (i.e. application to restraint proceedings, etc., against company);
  • section 71 of the IRDA (or any previous written law corresponding to that provision) (i.e. application to approve compromise or arrangement without meeting of creditors);
  • section 91 of the IRDA (or any previous written law corresponding to that provision) (i.e. application for judicial management order and to appoint judicial manager);
  • section 124 of the IRDA (or any previous written law corresponding to that provision) (i.e. application for winding up);

(d) An order under section 210(10) of the CA, one or more orders under section 64(1) of the IRDA (or any previous written law corresponding to that provision) or an automatic moratorium mentioned in section 64(8) of the IRDA (or any previous written law corresponding to that provision) is in force in relation to the AC;

(e) A provisional liquidator of the AC has been appointed under section 161 of the IRDA (or any previous written law corresponding to that provision);

(f) An interim judicial manager has been appointed by the Court under section 92 of the IRDA (or any previous written law corresponding to that provision) or by the AC under section 94(3) of the IRDA, and the term of the appointment of the interim judicial manager has not ended;

(g) The AC has made an application for acceptance into the simplified winding up programme under section 250D which is pending;

(h) The affairs of the AC are such that:

  • the administration of the SDRP in relation to the company is likely to require significant resources or specialised knowledge or expertise; or
  • the AC (with the assistance of the Restructuring Advisor appointed by the Official Receiver) is unlikely to be able to formulate a proposed compromise or arrangement with its creditors, obtain the agreement of two-thirds majority in value of its creditors to the proposed compromise or arrangement, and make an application to the Court under section 72M(1) for the approval of the proposed compromise or arrangement within 90 days after the AC’s acceptance into the programme;

(i) There is a trustee appointed for debenture holders in respect of the AC;

(j) At least one-third in value of the creditors of the AC object to the AC’s acceptance into the SDRP;

(k) A person who has appointed, or is or may be entitled to appoint, a receiver and manager of the whole (or substantially the whole) of the AC’s property under the terms of any debentures of the AC secured by a floating charge, or by a floating charge and one or more fixed charges, that would be valid and enforceable in the case of a liquidation of the AC, objects to the AC’s acceptance into the SDRP.

(l) A declaration or an injunction has been made or granted by the District Court or the General Division of the High Court against the AC under section 9(1)(a) or (b) of the Consumer Protection (Fair Trading) Act (Cap. 52A).

SUBMISSION OF APPLICATION - SIMPLIFIED DEBT RESTRUCTURING PROGRAMME

12. What supporting documents are required in an Applicant Company’s (“AC”) application for the Simplified Debt Restructuring Programme (“SDRP”)?

Mandatory Supporting Documents for submission
(a) AC’s Business Plan with a 90-day cashflow projection and a 24-month projected Profit & Loss Statement;
(b) The latest audited / unaudited financial statements made up to the last financial year;
(c) The list of creditors and amounts owed to each creditor; and
(d) A special resolution passed by the AC in general meeting authorising the making of the application for the SDRP.
The templates for items (a) and (c) are found here.
Optional Supporting Documents
The unaudited balance sheet, profit and loss statement and cash flow statement of the AC for the period(s) subsequent to the financial statements in item b) above, if available.


13. Will an incomplete set of supporting documents be accepted in the application for the Simplified Debt Restructuring Programme (“SDRP”)?

The Official Receiver (“OR”) may request for further supporting documents and information from the Applicant Company (“AC”) which must be submitted within the time period specified by the OR in order for the OR to assess the application. The OR may refuse to consider the application if the further supporting documents and information requested for is not received within the period specified.

14. Where can Applicant Companies (“AC”) seek assistance in their application for the Simplified Debt Restructuring Programme (“SDRP”)?

ACs that require assistance in completing the Business Plan template for the SDRP can approach the various SME Centres and their business advisors for help. To make an appointment with a business advisor, please visit this website

ACs are advised to seek the assistance of the company accountant or finance personnel to complete the templates for the 90-day cashflow projection and 24-month projected Profit & Loss Statement.

ASSESSMENT OF APPLICATION - SIMPLIFIED DEBT RESTRUCTURING PROGRAMME

15. If the Applicant Company’s (“AC”) application is assessed to have fulfilled the eligibility criteria and meets the requirements for acceptance into the Simplified Debt Restructuring Programme (“SDRP”), what happens next?

A Qualified Person (“QP”) appointed by the Official Receiver (“OR”) will assess whether the AC and its debts have a reasonable prospect of being successfully restructured based on the AC’s Business Plan and supporting documents submitted in the application. At the same time, the OR sends a Notice of Application to the AC and its creditor(s) and publishes the Notice of Application on MinLaw’s website.

If the QP assesses the AC to have fulfilled the eligibility criteria, and is suitable for the SDRP, and if the OR receives no objections to the AC’s application for the SDRP from the AC’s creditors, the AC will be required to pay a deposit of $18,750, towards the administration fee, to the OR.

Upon payment of the deposit of $18,750, a Notice of Acceptance is published on the MinLaw website, notifying the creditors of the company of the AC’s acceptance into the SDRP.

16. What happens after the Applicant Company (“AC”) is accepted into the Simplified Debt Restructuring Programme (“SDRP”)?

The appointed Restructuring Advisor (“RA”) will work with, and assist the AC in:
(a) Formulating a proposed scheme of arrangement between the AC and its creditors. If the RA is of the view that the Business Plan is feasible and merits consideration by the creditors, the RA will obtain the agreement of a majority of at least two-thirds in value of the creditors; and
(b) Making an application to the Court for the sanction of the proposed scheme of arrangement. The AC may also engage a lawyer at its own cost to work with and assist the RA with the application to the Court.

17. Who are the Qualified Persons (“QP”) and Restructuring Advisors (“RA”) appointed by the Official Receiver (“OR”)?

The QPs and RAs appointed by the OR are a panel of licensed insolvency practitioners who are professional public accountants and chartered accountants.

18. How long will the Simplified Debt Restructuring Programme (“SDRP”) take?

Upon acceptance into the SDRP, the entire process must be completed within a default period of 90 days from the published date of the Notice of Acceptance. The default period of 90 days can vary depending on whether it is extended by the Official Receiver (the extension may only be made once), or when the AC’s application on the proposed scheme of arrangement is granted or dismissed by the Court, or withdrawn.

COST OF APPLICATION - SIMPLIFIED DEBT RESTRUCTURING PROGRAMME

19. Apart from the application fee of $450 and administration fee of $18,750 paid by the Applicant Company (“AC”), what other costs and expenses can the AC expect to incur for the Simplified Debt Restructuring Programme (“SDRP”)?

The AC will be required to bear the costs and expenses incurred in the course of administration of the SDRP. Examples of such costs and expenses are:
a) Cost of obtaining legal advice on matters concerning the AC
b) Cost of publishing the required notices in the Gazette
c) Cost of making an application to the Court for sanction of the proposed scheme of arrangement

Apart from the cost of publishing the required notices in the Gazette, other costs and expenses are to be agreed to between the AC and the vendor(s), and paid directly by the AC to them. The appointed Restructuring Advisor will obtain the AC’s prior consent before incurring any cost and expenses.

20. Are there any subsidies for the Restructuring Advisor’s (“RA”) fees?

The deposit of $18,750 paid by the AC, towards the administration fee, takes into account an average government subsidy of 25% for companies admitted into the Simplified Debt Restructuring Programme (“SDRP”).

The SDRP is a simplified version of the existing debt restructuring tools in the market (i.e. Judicial Managements and Schemes of Arrangement). Under the SDRP, the RA is intended to act as a single point of contact in dealing with multiple creditors to i) develop a restructuring plan, ii) co-ordinate with the creditors to vote on the restructuring plan and iii) have the Court sanction the restructuring plan.


TAX IMPLICATIONS - SIMPLIFIED DEBT RESTRUCTURING PROGRAMME

21. Are there any tax implications or benefits under the Simplified Debt Restructuring Programme (“SDRP”)?

Applicant Companies(“AC”) that successfully restructure their debts under the SDRP will have the forgiven amounts* written back as revenue. Taking into consideration the purpose of SDRP, debts forgiven (including trade debts and loans) under the SDRP will be regarded as capital in nature and hence not subject to income tax. ACs can refer to IRAS website for more information on the tax treatment.

* Forgiven amounts are those owed to the creditors of the AC which have been waived off under the SDRP.

APPLICATION REQUIREMENTS - SIMPLIFIED WINDING UP PROGRAMME

22. What are the requirements for a company to be accepted into the Simplified Winding Up Programme (“SWUP”)?

The Official Receiver (“OR”) may accept the company’s application for the SWUP if both the following requirements are met:
(a) The Applicant Company (“AC”) meets the eligibility criteria (set out below); and
(b) There is no circumstance (set out below) known to the OR that makes the AC unsuitable for acceptance into the SWUP.

Eligibility criteria to be fulfilled by AC
(a) Annual sales turnover not exceeding $10 million;
(b) Has not more than 30 employees;
(c) Has not more than 50 creditors;
(d) The liabilities of the company (including prospective and contingent liabilities) not exceeding $2 million;
(e) The value of realisable assets of the company (excluding any asset that is subject to a security) does not exceed $50,000;
(f) Not a foreign company (i.e. the AC is incorporated in Singapore).

Circumstances affecting suitability for acceptance
(a) The AC is being wound up pursuant to:

  • an order for winding up of a company under section 216(2)(f) of the Companies Act (Cap. 50) (“CA”) (i.e. due to oppression or injustice);
  • an order for winding up made under section 124 of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) (or any previous written law corresponding to that provision) (i.e. winding up by Court);
  • a resolution passed for the winding up of the company under section 160 of the IRDA (or any previous written law corresponding to that provision) (i.e. voluntary winding up);

(b) The AC is in judicial management:

  • within the meaning of section 88(2) of the IRDA; or
  • pursuant to an application made under the repealed section 227B(1) of the CA;

(c) An application has been made by or in respect of the AC under any of the following provisions and the application is pending:

  • section 210(1), (4) or (10) of the CA (i.e. application to approve compromise with creditors, members and holders of units of shares);
  • section 71 of the IRDA (or any previous written law corresponding to that provision) (i.e. application to approve compromise or arrangement without meeting of creditors);
  • section 91 of the IRDA (or any previous written law corresponding to that provision) (i.e. application for judicial management order and to appoint judicial manager);
  • section 124 of the IRDA (or any previous written law corresponding to that provision) (i.e. application for winding up);

(d) An order under section 210(10) of the CA, one or more orders under section 64(1) of the IRDA (or any previous written law corresponding to that provision) or an automatic moratorium mentioned in section 64(8) of the IRDA (or any previous written law corresponding to that provision) is in force in relation to the AC;

(e) A provisional liquidator of the AC has been appointed under section 161 of the IRDA (or any previous written law corresponding to that provision);

(f) An interim judicial manager has been appointed by the Court under section 92 of the IRDA (or any previous written law corresponding to that provision) or by the AC under section 94(3) of the IRDA, and the term of the appointment of the interim judicial manager has not ended;

(g) The AC has made an application for acceptance into the simplified debt restructuring programme under section 72E which is pending;

(h) There is any dispute or disagreement between 2 or more relevant persons as to the affairs of the AC;

(i) There is any allegation made in writing to the OR by a past judicial manager or liquidator, a creditor or a contributory, or an employee or officer (whether past or present), of the AC, that:

  • any business of the company has been carried on with intent to defraud creditors of the AC or creditors of any other person or for any fraudulent purpose within the meaning of section 238 (or any previous written law corresponding to that provision);
  • the AC has traded wrongfully within the meaning of section 239(12) of the IRDA (or any previous written law corresponding to that provision); or
  • any person who has taken part in the formation or promotion of the AC or any past or present officer or past judicial manager or liquidator of the AC has misapplied or retained or become liable or accountable for any money or property of the company or been guilty of any misfeasance or breach of trust or duty in relation to the AC within the meaning of section 240 of the IRDA (or any previous written law corresponding to that provision;

(j) the AC is a party to any legal proceedings before a court, an arbitral tribunal or other body (whether in Singapore or elsewhere) which are pending;

(k) the winding up of the AC is likely to require significant resources or specialised knowledge or expertise;

(l) the winding up of the AC:

  • requires greater supervision of the Court or participation of the creditors or contributories than is provided for or applicable to a winding up under the SWUP; or
  • is likely to require the exercise of a power by the Court or the liquidator under Part 8 or 9 that is disapplied by section 250L or is otherwise unavailable in a winding up under the SWUP.

(m) A declaration or an injunction has been made or granted by the District Court or the General Division of the High Court against the AC under section 9(1)(a) or (b) of the Consumer Protection (Fair Trading) Act (Cap. 52A).

23. How is the simplified winding up framework under the Simplified Winding Up Programme (“SWUP”) different from a conventional winding up under the Insolvency, Restructuring and Dissolution Act 2018?

The broad differences are:
(a) The simplified winding up does not require an application to Court. The process begins with an application by the Applicant Company (“AC”) to the Official Receiver (“OR”) to be wound up voluntarily upon being accepted into the SWUP.
(b) The OR is the liquidator of the AC accepted into the SWUP.
(c) The scope of the liquidator’s functions in under the simplified winding up will be reduced given the profile of the companies in the SWUP, as certain complex and costly aspects of a conventional winding up are not applicable in the simplified process.

SUBMISSION OF APPLICATION - SIMPLIFIED WINDING UP PROGRAMME

24. What supporting documents are required in an Applicant Company’s (“AC”) application for the Simplified Winding Up Programme (“SWUP”)?

Mandatory Supporting Documents for submission
(a) A special resolution of the company in general meeting authorising the making of the application for the SWUP, and resolving that the company be wound up voluntarily upon being accepted into the SWUP;
(b) The latest audited / unaudited financial statements made up to the last financial year; and
(c) A copy of the Statement of Affairs of the company. The template is found here.
Optional Supporting Documents
The unaudited balance sheet, profit and loss statement and cash flow statement of the AC for the period(s) subsequent to the financial statements in item b) above, if available.


The application has to be submitted by an officer of the AC, i.e. the director or secretary of the AC. If you are making the application and submitting the Statement of Affairs on behalf of the officer of the AC, please attach a Letter of Authorisation from the company officer.

25. Will an incomplete set of supporting documents be accepted in the application for the Simplified Winding Up Programme (“SWUP”)?

The Official Receiver (“OR”) may request for further supporting documents and information from the Applicant Company (“AC”) which must be submitted within the time period specified by the OR in order for the OR to assess the application. The OR may refuse to consider the application if the further supporting documents and information requested for is not received within the period specified.

26. Where can Applicant Companies (“AC”) seek assistance in their application for the Simplified Winding Up Programme (“SWUP”)?

ACs that require assistance in completing their Statement of Affairs are advised to seek the assistance of the company accountant or finance personnel to complete the Statement of Affairs.

For further assistance required on the filling in and submission of the Statement of Affairs for the SWUP, please submit the enquiry here.

LENGTH OF PROGRAMME - SIMPLIFIED WINDING UP PROGRAMME

27. How long will the simplified winding up of a company under the Simplified Winding Up Programme (“SWUP”) take?

In cases where the Applicant Company’s (“AC”) realisable assets are insufficient to cover the expenses of the winding up and the affairs of the company do not require any further investigation, the AC will be placed into an early dissolution which is targeted to complete within 90 days of being accepted into the SWUP.

In cases which involve the realisation of assets, the AC will be placed into dissolution within one year of being accepted into the SWUP, subject to the circumstances of the case and the complexity involved in realising the assets under administration.

FEES PAYABLE - SIMPLIFIED WINDING UP PROGRAMME

28. Apart from the application fee of $450 and the administration fee of $2,700 paid by the Applicant Company (“AC”), what other fees are involved in the winding up of a company under the programme?

The following fees will apply:
(a) A realisation fee that is based on the value of assets realised for the company will be paid from the proceeds of the assets realised; and
(b) A distribution fee that is based on the value of dividends paid to the creditors of the company from the proceeds of the assets realised after all other costs and expenses incurred in the administration of the simplified winding up are paid.

29. What are the other costs and expenses payable under the Simplified Winding Up Programme (“SWUP”)?

Certain costs and expenses may be incurred in the course of administration of the SWUP. Examples of such costs and expenses are:
(a) Cost of transporting company’s assets to warehouse
(b) Cost of valuation of the company’s assets
(c) Cost of obtaining legal advice on matters concerning the company
(d) Cost of publishing newspaper advertisements and gazettes

The proceeds from the assets realised in the course of the administration will be used to pay for such costs and expenses incurred.

DISTRIBUTION OF DIVIDENDS - SIMPLIFIED WINDING UP PROGRAMME

30. How will the creditors of the Applicant Company (“AC”) be paid?

Upon the realisation of the assets of the AC and upon the assessment that there are surplus monies available for distribution as dividends to creditors of the AC, the Official Receiver (“OR”) puts up a Notice of Intended Dividend to invite creditors to file their Proofs of Debt with the OR. After the expiry of the Notice of Intended Dividend, the Proofs of Debt filed with the OR are adjudicated and dividends shall be declared and paid to the creditors of the admitted claims via GIRO (for local creditors) or telegraphic transfers (for foreign creditors).

GST REQUIREMENTS - SIMPLIFIED WINDING UP PROGRAMME

31. Are GST-registered companies required to apply for deregistration from GST before applying for the Simplified Winding Up Programme (“SWUP”)?

GST-registered companies who intend to apply for the SWUP are advised to cancel their GST registration before submitting their application for the SWUP. This is to facilitate the eventual liquidation process. Applicant Comapnies may visit IRAS website on Cancelling GST Registration for more information and apply online to cancel GST registration via myTax Portal (Click on GST > Apply for Cancellation of GST Registration).

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