Best Restructuring & Insolvency Lawyers in Singapore

About Restructuring & Insolvency Law in Singapore

Restructuring and insolvency law in Singapore deals with the legal processes available to businesses and individuals facing severe financial distress. This field encompasses measures that aim to help companies and individuals either recover and reorganise their financial affairs or, where recovery is not possible, to wind down their affairs in an orderly way. Singapore’s legal system provides a modern and business-friendly framework for both restructuring and insolvency, making it a leading hub in Asia for such matters. These laws strike a balance between creditor protection and giving viable businesses a chance to rehabilitate.

Why You May Need a Lawyer

There are various situations where legal assistance becomes crucial in restructuring and insolvency matters. Some common reasons include:

• You are a business owner struggling with overwhelming debts and need advice on possible solutions.
• Your business is facing legal action from creditors who are demanding payment.
• You are considering placing your company under judicial management to attempt recovery.
• There are disagreements among creditors or shareholders about the company’s future.
• Your company is being threatened with winding up proceedings (liquidation).
• You are an individual facing bankruptcy or need representation in a bankruptcy application.
• You are a creditor seeking to recover debts from insolvent businesses or individuals.
• You want to understand your rights and obligations as a director during financial distress.

A lawyer can provide tailored legal advice, represent you in court, assist with negotiations, and ensure that your interests are safeguarded throughout the process.

Local Laws Overview

Singapore’s key restructuring and insolvency laws are found in the Insolvency, Restructuring and Dissolution Act 2018 (IRDA). This legislation consolidates company insolvency, personal bankruptcy, and restructuring processes. Some important features of the Singapore regime include:

• Restructuring Options: Schemes of arrangement and judicial management allow companies in distress to attempt rehabilitation.
• Liquidation: Winding up procedures are available for companies that are no longer viable, overseen by a liquidator.
• Cross-border Recognition: Singapore courts are empowered to assist in cross-border insolvency cases, following international best practices.
• Personal Bankruptcy: There are separate processes for individuals, with thresholds for bankruptcy applications and clear procedures for discharge from bankruptcy.
• Director Duties and Liabilities: Directors must act in the best interests of creditors when insolvency is likely. Misconduct or wrongful trading can result in personal liability.

Singapore’s legal system emphasises fairness, transparency, and efficiency during insolvency and restructuring, offering protection for creditors while enabling genuine attempts at business recovery.

Frequently Asked Questions

What is the difference between restructuring and insolvency?

Restructuring involves legal processes to help a financially distressed company or individual reorganise their affairs and return to viability. Insolvency refers to the inability to pay debts when they fall due, often leading to liquidation (for companies) or bankruptcy (for individuals).

When should a company consider restructuring?

A company should consider restructuring if it faces financial difficulty but has a realistic chance of surviving with changes to its debt, business model, or operations. Early intervention usually increases the likelihood of a successful restructuring.

What are the main restructuring tools in Singapore?

The primary restructuring options are schemes of arrangement and judicial management. Schemes of arrangement allow reorganisation of debts with creditor approval, while judicial management gives court-appointed managers control to attempt recovery.

What is the process for company liquidation?

Liquidation, or winding up, can be started by the company (voluntary) or by creditors through the court (compulsory). A liquidator is appointed to sell assets and distribute the proceeds to creditors based on legal priorities.

What happens to employees during insolvency?

Employees are typically entitled to salary and retrenchment benefits owed before other unsecured creditors. These claims are usually given priority up to specified limits under the law.

How does personal bankruptcy work in Singapore?

Individuals who owe at least the minimum threshold (currently S$15,000) and cannot pay may be made bankrupt by creditor application or their own application. The Official Assignee manages their assets to repay creditors, and discharged bankruptcy is possible over time under certain conditions.

Can a company continue trading during restructuring or insolvency?

In some restructuring processes, such as judicial management, limited trading is allowed if it benefits creditors and helps rehabilitation. During liquidation, trading usually ceases unless it is necessary to complete the winding up.

What are the duties of directors when a company is in financial distress?

Directors must act in the best interests of creditors, avoid wrongful trading, and ensure they do not incur further debts the company cannot pay. Breaching these duties can result in personal liability.

How are creditors’ rights protected in Singapore?

Creditors can participate in meetings, vote on restructuring proposals, and apply to court if they feel prejudiced. Secured creditors generally have priority claims on secured assets, and the law recognises their rights during insolvency proceedings.

Is cross-border insolvency recognised in Singapore?

Yes, Singapore follows internationally recognised rules and can offer assistance to foreign insolvency representatives. Local courts may also recognise foreign insolvency proceedings and grant relief as appropriate.

Additional Resources

If you need information or guidance about restructuring and insolvency in Singapore, consider reaching out to the following:

• Insolvency Office (part of the Ministry of Law) - The government body responsible for overseeing bankruptcy and insolvency administration in Singapore.
• The Law Society of Singapore - Can refer you to qualified lawyers experienced in restructuring and insolvency.
• The Singapore Courts - The Supreme Court and State Courts provide information on insolvency procedures and resources for parties involved in cases.
• Credit Counselling Singapore (CCS) - Offers debt management and credit counselling services, particularly helpful for individuals facing bankruptcy.

Next Steps

If you or your business is experiencing financial distress, it is important to seek professional legal advice as early as possible. Here are some steps to consider:

• Consult with a lawyer who specialises in restructuring and insolvency to discuss your circumstances.
• Gather all relevant financial documents and records before your consultation for a clearer assessment.
• Consider alternative actions, such as informal negotiations with creditors or internal restructuring, where appropriate.
• Follow all legal requirements and timelines for any court proceedings or statutory notices.

Early intervention can improve your chances of achieving a positive outcome. A qualified restructuring and insolvency lawyer will guide you through your options, protect your interests, and help you navigate the legal challenges ahead.