Insights – Key takeaways from iPAM / INSOL Asia Hub webinar on Singapore’s Simplified Insolvency Programme and Restructuring of Small and Medium-size Enterprises
An engaging and insightful discussion on Singapore’s Simplified Debt Restructuring Programme (“SDRP”) and Simplified Winding Up Programme at the iPAM / INSOL Asia Hub webinar held on 21 April 2022.
DHC Capital Partner, David Chew participated on the webinar with Tan Yu Wen (Insolvency & Public Trustee’s Office Singapore). The panel was moderated by Tan Meiyen (Partner, Oon & Bazul) and Lee Shih (Partner, Lim Chee Wee Partnership).
Attendees included representatives from Malaysian government agencies including Companies Commission of Malaysia, Agensi Kaunseling dan Pengurusan Kredit (AKPK), Prokhas and Bank Negara Malaysia.
Key takeaways from the webinar:
Objective: To provide simpler, faster, and lower cost proceedings to assist micro and small companies (“MSCs”) in need of restructuring or winding up. The programme commenced on 29 January 2021 and is available to 28 July 2022
Simplified debt restructuring programme: 5 step process involving:
Application – Online application to Official Receiver (“OR”). MSCs need to meet eligibility criteria to enter the programme
Assessment – Restructuring Advisor (“RA”) appointed to assess prospects of being successfully restructured
Acceptance – MSC accepted. Creditor moratorium commences for 90 days (or extended in exceptional cases with OR’s consent). Business operations continue to trade
Restructuring – RA to assist MSC to drive the restructuring process and formulate a restructuring plan between the MSC and its creditors. RA will assist to get creditor support – 2/3rd in value. RA will assist to make application to the Court for the approval of the proposed restructuring plan (simplified process by filings only – no lawyers)
Discharge – MSC will be discharged after 90 days or as extended by the OR in exceptional cases
Restructuring: Proposals likely to be based on:
Forgiveness of debt (i.e. haircuts)
Extension of time for repayment
Release of third-party liabilities (e.g. personal guarantees)
Tax treatment of forgiven debts: IRAS (Inland Revenue Authority of Singapore) guidance states that debts forgiven (including trade debts and loans) under the SDRP will be regarded as capital in nature and not subject to tax (https://www.iras.gov.sg/news-events/singapore-budget/covid-19-support-measures-and-tax-guidance/tax-guidance/for-companies-self-employed-partnerships/tax-treatment-of-debts-forgiven-under-minlaw's-simplified-debt-restructuring-programme)
Benefits: SDRP facilitates simplified “pre-packaged” schemes
One application to Court (light touch with no lawyers)
Lower voting threshold than traditional schemes (2/3rd in value; majority in number)
Temporary moratorium
Tax benefits
About iPAM (Insolvency Practitioners Association of Malaysia)
iPAM is Malaysia’s leading association for professionals engaged in restructuring and insolvency work.
About INSOL International / INSOL Asia Hub
INSOL International was formed in 1982 and is the leading global association of accountants, lawyers and other professionals specialising in restructuring, insolvency and turnaround.
INSOL Asia Hub was established in Singapore in 2019 to provide members with greater opportunities and connections in the Asia Pacific region.