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ACP Singapore - Bankruptcy Cheat Sheet by

law

Purposes of bankruptcy

Relieve bankrupt of debts he cannot pay
Rehabi­litate bankrupt and allow him to start anew
Deterrence to irresp­onsible handling of finances
Protect members of society from errant debtors
Punish debtor for irresp­onsible handling of finances

Altern­atives to Bankrupty

Debtor's voluntary arrang­ement
Consensual settlement between debtor and creditors
Debtor apply to court to make a proposal for voluntary arrang­ement under Part V of the Bankruptcy Act
Negotiate for a settlement of the debt between debtor and creditor
Creditors' meeting will be convened for creditors to consider proposal.
-
Court can facilitate by making an “interim order” Moratorium – no bankru­ptc­y/legal procee­dings permitted
-

Who can apply for bankru­ptcy?

Section 57 BA: Creditor – Creditor’s applic­ation for bankruptcy of the debtor
Section 58 BA: Debtor – Debtor’s applic­ation for declar­ation of bankruptcy

Requir­ements for Debtor

Section 60 BA:
Bankruptcy applic­ation shall only be made to Court against a debtor if he is
(a) domiciled in Singapore;
(b) has property in Singapore; or
(c) has, at any time within the period of one year immedi­ately preceding the date of the making of the applic­ation —
(i) been ordinarily resident or has had a place of residence in Singapore; or
(ii) carried on business in Singapore.

Ground of Bankruptcy applic­ation

Debtor’s inability to pay debt or debts as and when they fall due ie. Insolvency

Section 61 BA
For debts incurred in Singapore:
(a) the amount of the debt, or the aggregate amount of the debts, is not less than $10,000;
(b) the debt is for a liquidated sum payable to the applicant creditor immedi­ately;
(c) the debtor is unable to pay the debt or each of the debts

For debts incurred outside of Singapore:
(d) such debt is payable by the debtor to the applicant creditor by virtue of a judgment or an award which is enforc­eable by execution in Singapore.

Presum­ption of insolvency

Claimant has served a Statutory Demand on debtor and 21 days has lapsed and debtor has not complied with SD;
Execution in respect of a Judgment Debt has not be satisfied or satisfied in part;
Debtor has departed or remains outside of Singapore with the intention to evade debt obliga­tions;
DRS inappl­ica­bility / failure / revocation of cert of completion

Statutory demand

Rule 96 Bankruptcy Rules
Creditor shall make reasonable attempts to effect personal service of the Statutory Demand
Where the creditor is not able to effect personal service, the demand may be served by way of substi­tuted service (by such other means as would be most effective in bringing the demand to the notice of the debtor)

Upon being served with a Statutory Demand, the debtor may:
(a) pay/se­cur­e/c­ompound the debt; or
(b) apply to set aside the Statutory Demand; or
(c) fail/r­efu­se/­neglect to comply with the Statutory Demand

Rule 97 Bankruptcy Rules
Debtor who has been served with a Statutory Demand may:
(a) within 14 days; or
(b) where the demand was served outside jurisd­iction, within 21 days,
from the date on which the demand is served apply to court by way of Origin­ating Summons for an order setting aside the Statutory Demand

Section 62 BA
Debtor is presumed unable to pay debt if:
Debt is immedi­ately payable and
at least 21 days have elapsed since the Statutory Demand was served, the debtor has neither complied with it

Rule 102 Bankruptcy Rules
Bankruptcy applic­ation based on Statutory Demand – applic­ation shall not be made if Statutory Demand was served more than 4 months before the date of filing of the applic­ation

Execution of Judgment Debt

Writ of Seizure and Sale & Garnishee Order

Section 62 BA
Debtor is presumed unable to pay debt if:
Execution in respect of judgment debt has been returned unsati­sfied in whole or in part

Rule 103 Bankruptcy Rules
The applic­ation shall not be filed if more than 4 months have elapsed since the date on which the execution was completed.

Bankruptcy Applic­ation

Debtor
Creditor
Documents required:
Debtor’s Bankruptcy Applic­ation
Creditor's Bankruptcy Applic­ation
Affidavit
Affidavit
-
Affidavit of Service
Steps:
1. Deposit $1,600 with OA
1. Lodgement Form to deposit $1,600 with OA
2.File Bankruptcy Applic­ation and Affidavit in High Court
2. File Bankruptcy Applic­ation and Affidavit in High Court
3. Hearing date given by High Court Registry
3. Hearing Date given by High Court Registry
-
4. Personal service on Debtor (Rule 109) / Substi­tuted Service
-
5. Proceed to bankruptcy hearing
-
6. Prior to hearing, creditor to file affidavit of service og BA and addidavit of non-sa­tis­faction of debt

Receipt of Creditor's Bankruptcy Applic­ation

After being served with the applic­ation, the debtor may:
(a) pay up/ secure­/co­mpound the debt or
(b) fail/n­eglect/ refuse to pay the debt or
(c) oppose the applic­ation

Rule 119 Bankruptcy Rules
Where the debtor intends to oppose a creditor’s bankruptcy applic­ation, … not later than 3 days before the hearing —
file a notice specifying the grounds of objection
serve copy of the notice on the applicant creditor and the Official Assignee

Effect on Bankruptcy applic­ation

Section 77(1) of the BA
Where a person is adjudged bankrupt, any dispos­ition of property made by him during the period beginning with the day of the making of the bankruptcy applic­ation and ending with the making of the bankruptcy order shall be void except to the extent that such dispos­ition has been made with the consent of, or been subseq­uently ratified by, the court.

Bankrupty Hearing

Who may attend
Creditor making applic­ation/ Debtor/ Any Creditor who has given notice to court in Form 5 Bankruptcy Rules/ Official Assignee
Where
High Court; in Chambers (Sections 3-4 BA)
Before whom
The Registrar (Section 5 BA)
Powers of Court
To adjourn/ give direct­ions/ refer to DRS/make Bankruptcy Order/­order stay of procee­dings
What happens
Court decides on: Whether the Debtor is insolvent/ Whether a Bankruptcy Order should be made

Bankruptcy Hearing

Section 65(1) BA
Court may make an order for bankruptcy where

(a) the debt has neither been paid nor secured or compounded for; and
(b) where the debtor does not appear at the hearing, the applic­ation has been duly served on him.

Section 65(2) BA
Court may dismiss the applic­ation :

If court not satisfied with proof of debt owed by debtor
If court not satisfied with proof of service
If court satisfied that debtor can pay debt
If court satisfied that debtor has made offer to secure or compound debt – offer is unreas­onably refused
If court satisfied that there are other sufficient reason not to make order.

Debt Repayment Scheme

Requir­ements for Eligib­ility:
- Debts owed are less than $100,000,
- Not bankrupt within last 5 years
- No voluntary arrang­ement within last 5 years
- No DRS within last 5 years
- Not sole-p­rop­rie­tor­/pa­rtner
- Earning a regular income

Where eligible, at Bankruptcy Hearing, Court will adjourn Bankruptcy Applic­ation for OA to assess on suitab­ility of DRS
If OA assesses that DRS is unsuit­able, OA will issue Notice of Unsuit­ability -> Bankruptcy Hearing
If OA assesses that DRS is suitable, OA will administer DRS. Bankruptcy Applic­ation withdrawn.

Where DRS is implem­ented by debtor fails to provide inform­ation or complies with scheme,
- Certif­icate of Failure of DRS (Section 56M BA)
- Deemed to be insolvent
- Creditor can take out another Bankruptcy Applic­ation

Section 62 BA : presumed to be unable to pay the debt if :
- Certif­icate of Inappl­ica­bility for DRS
- Certif­icate of Failure of DRS
- Revocation of Certif­icate of Comple­teness for DRS

Bankruptcy Order

Rule 128 Bankruptcy Rules
Bankruptcy Order (Form 8) issued by the Court

Rule 129 Bankruptcy Rules
Applicant creditor shall serve Bankruptcy Order on OA

Rule 131 Bankruptcy Rules
OA shall cause the Bankruptcy Order to be advertised in the local newspapers

Effect of Bankruptcy

Section 81 BA
Debtor is required to disclose all assets and liabil­ities to the Official Assignee
Produce Statement of Affairs within 21 days of date of Bankruptcy Order


Creditors will be notified to submit their Proof of Debt against the bankrupt – Proof of Debt may be submitted online via the IPTO website

And other disqua­lif­ication

Ending Bankruptcy

Discharge
Annulment
Bankruptcy ends as a conseq­uence of fulfilment of obliga­tions under bankruptcy
Bankruptcy order removed because it should not have been made in the first place or all the debts and expenses have not been paid

Discharge

By Court (s124)
By Official Assignee (s125)

Discharge by Court

Who can apply
Official Assignee/ Bankrupt/ Any person having interest
When can apply
at any time and for any debt size
What can the Court do
Refuse to discharge/ Discharge/ Discharge with conditions
Creditor can object but Court has the discre­tion:
- Length of bankruptcy
- Amount of debt owed
- Amount of dividend
- Conduct of bankrupt
- Reason for bankruptcy
- Reason for objection

Discharge by OA

What conditions are there?
Min 3 years and debts proved must not exceed $500k
Creditors can first raise objections to the OA (S126(2))
If OA rejects the creditor’s objection, creditor may then apply to Court to prohibit the OA from issuing the Certif­icate of Discharge (S126(4))

Annulment

Annulment by the Court – S 123 BA
Circum­stances :
(a) the order ought not to have been made;
(b) both the debts and the expenses of the bankruptcy have all either been paid or secured for to the satisf­action of the court;
(c) procee­dings are pending in Malaysia under the bankruptcy law of Malaysia and that distri­bution ought to take place there; or
(d) a majority of the creditors are resident in Malaysia, and that his estate and effects ought to be distri­buted among the creditors under the bankruptcy law of Malaysia.

Annulment by OA – S 123A BA
OA may issue a certif­icate annulling a bankruptcy order … the debts which have been proved and the expenses of the bankruptcy have all, since the making of the order, been paid.

Annulment by OA – S 95A BA
Where a compos­ition or scheme is accepted by the creditors by a special resolution under section 95, the Official Assignee may annul the bankruptcy order by issuing a certif­icate of annulment.

Effect of Discharge

S127
Release from all debts provable in the bankruptcy
No release from :
any debt due to the Govern­ment;
any provable debt which incurred in respect of fraud or fraudulent breach of trust to which he was party;
any liability in respect of a fine imposed for an offence.
any debt which has been proved and which —
(a) consists a liability to pay damages in respect of personal injuries to any person;
(b) arises under any order made in procee­dings under the Women’s Charter relating to family matters; or
(c) arises under an order involving the confis­cation of the proceeds of crime.

S128
A discharged bankrupt shall give assistance as OA requires in the realis­ation and distri­bution of such of his property as is vested in the OA
If the discharged bankrupt fails to give assistance to OA —
(a)he shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000; and
(b)the court may, if it thinks fit, revoke his discharge.

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