Bankruptcy

What Is It

Bankruptcy is a process where the debtor is publicly recognised (i.e. by a court order) as unable to pay their debts (i.e. insolvent). The Court usually appoints an Official Assignee to administer the bankruptcy estate, which involves the selling of assets, registration of creditors’ claims and paying out dividends to his creditors.

This chapter is divided into three sections:

1. Bankruptcy Procedure
2. Effects of Bankruptcy
3. Commonly Asked Questions Related to Bankruptcy

This chapter deals with the bankruptcy of individual persons, as different legal provisions apply to the insolvency of corporations (the Companies Act) and limited liability partnerships (Limited Liability Partnerships Act).

NOTE: As of July 2014, the Insolvency and Public Trustee’s Office (IPTO) is in the midst of reviewing the insolvency regime in Singapore and aims to introduce an Insolvency Act that covers both personal and corporate insolvencies.

Procedure

How is a Person Declared Bankrupt?

A person is declared bankrupt on the order of the High Court if he is unable to pay his debts of at least S$10,000. This is usually done upon the application or petition of a creditor, although the debtor may file a bankruptcy application on his or her own behalf. The creditor taking out the application for bankruptcy would have served the debtor a notice known as a Statutory Demand, demanding payment from the debtor. If the payment is not met within a term of 21 days, the debtor is presumed unable to pay his debts and a petition will be filed in Court and the hearing date given. If payment is not made by the hearing date, the Court may proceed to make a Bankruptcy Order.

For bankruptcy applications filed after 18 May 2009 and in which the debt owed does not exceed S$100,000, the debtor will be referred to the Official Assignee for an assessment of eligibility and suitability to enter into a Debt Repayment Scheme (‘DRS’). In such cases, the bankruptcy application shall be adjourned for a period of 6 months or as otherwise ordered by the High Court.

The Official Assignee

The Official Assignee (‘OA’) is a public servant and an officer of the Court. In the vast majority of cases, the Court will appoint him as the trustee and receiver of the estate once a Bankruptcy Order is made. The OA will administer all of the insolvent person’s financial affairs, including selling of assets, registration of creditors’ claims and paying out dividends to his creditors. Alternatively, the Court may appoint a private trustee in lieu of the OA if the creditors so request.

The OA’s role is two-fold:

• To realise as anym assets as possible for distribution to creditors; and
• To assist the insolvent in obtaining a discharge from bankruptcy.

As an administrator of the bankruptcy estate, the OA also has the duty to investigate an insolvent’s conduct while he remains a bankrupt. Additional duties of the OA include adjudication of the creditors’ claims, payment of dividends to creditors and applying to the High Court for an insolvent’s discharge from bankruptcy. In situations where there are disputes between a bankrupt and his creditors regarding the quantum of debt or the amount of payment of the debt, the OA will act as mediator to assist in reaching a mutually acceptable proposal.

When a Statement of Affairs is Required and How to File It

A written Statement of Affairs (the ‘Statement’) is required when:

1. A bankruptcy application is adjourned and referred to an OA for determining eligibility and suitability for a DRS. In such a case, the OA shall give notice in writing requiring the Statement; or
2. A bankruptcy order is issued.

Contents of a Statement: Under Section 81 of the Bankruptcy Act (Cap 20), once declared bankrupt, the ‘insolvent’ is required to disclose to the OA via the Statement all of his assets, creditors, debts and other liabilities. This must be done within 21 days of the date of the Bankruptcy Order being made against the insolvent person.

If the insolvent person is a partner of a firm which has been declared insolvent, he will have to submit a Statement stating his personal assets and liabilities and a joint Statement of the insolvent firm’s assets and liabilities (unless the joint Statement has been submitted by another partner of the firm).

A ‘Guide to Completing Your Statement of Affairs’ will be sent to the insolvent together with his first appointment letter to see an officer of the OA upon the insolvent being made bankrupt. It will assist the insolvent in completing parts of the Statement when the insolvent attens his first interview, and will save him considerable time at the OA’s office.

Please note that it is an offence punishable with imprisonment for a term not exceeding 2 years or to a fine not exceeding S$10,000 or both if the insolvent, without reasonable excuse, fails to submit a Statement of Affairs to the OA or submits a Statement which is false, misleading or contains any material omission.

Administration Costs & Fees

1. Cost incurred by the petitioning creditor

Deposit: Under the Bankruptcy (Fees) Rules, any creditor or debtor who wishes to file a bankruptcy petition in the High Court must pay a deposit ofS$1,600to the OA. The petitioning creditor may recover his deposit from the insolvent if there are sufficient funds in the insolvent’s estate.

In case of withdrawal:In the event that a bankruptcy petition is withdrawn or dismissed by the High Court, the OA will retain S$250 as preliminary administration costs under the Bankruptcy (Fees) Rules and refund S$1,350 to the petitioning creditor.

2. Cost incurred by the insolvent

The insolvent bears the costs incurred by the petitioning creditor, i.e. the petitioning creditor’s deposit, solicitor’s fees and disbursements incurred in obtaining the Bankruptcy Order.

The OA also deducts a realisation fee from proceeds of assets realised, or deposits placed into the insolvent’s estate. Distribution fees are also levied on dividends distributed to creditors. Please check with the Insolvency & Public Trustee’s Office (IPTO) (https://www.ipto.gov.sg/) for an indication of the current fees.

Concerns of Creditors

Creditors should look to bankruptcy only as a last resort

Creditors should not rush to take up bankruptcy proceedings immediately upon default of payment by debtors, but should look to bankruptcy as a last resort for debt recovery and only after all other avenues for recovery have failed.

Alternative arrangements: Creditors are advised to consider a debt settlement proposal, Voluntary Arrangement or Debt Repayment Scheme (DRS) proposed by debtors under Part V of the Bankruptcy Act (Cap 20) carefully. This can be a very cost effective way of recovering debt through settlement instead of bankruptcy proceedings. Please refer to the next section on “Alternatives to Bankruptcy” for more information.

1. Duties of secured creditors

Secured creditors (e.g. banks or other financial institutions to whom the debtor has mortgaged or pledged his property or goods in order to secure credit facilities) should take possession of the property or goods upon the bankruptcy of the debtor. If the property is worth more than the amount of money secured against it, the balance from the proceeds of sale must be remitted to OA.

Secured creditors must realise their security within 6 months from the date of the Bankruptcy Order or such extended period as the OA may allow. Otherwise, they will not be entitled to claim any interest subsequent to the date of the Bankruptcy Order.

2. Filing your claim against the insolvent

Once a debtor is declared bankrupt by the High Court, his creditors canno longercommence or continue with any legal action against the insolvent to recover monetary claims that arose before his insolvency without leave of the Court. Instead, creditors are required to submit to the OA a Proof of Debt (Form 23) and give an account of their claims against the insolvent, along with the relevant supporting documents (e.g. invoices, receipts, agreements, judgments). The petitioning creditor should also file his Proof of Debt against the insolvent. Creditors who change their address after filing their Proof of Debt must notify the OA.

Debts that are incurred after the date of Bankruptcy Order are not provable (claimable) against the bankrupt’s estate.

3. Receiving dividends from the bankruptcy estate

Notices will be published in the Straits Times to inform creditors of the OA’s intention to declare dividend to creditors. This is done when there are sufficient funds in the bankruptcy estate for a dividend pay-out or for the insolvent to make a debt settlement offer.

Creditors are advised to carefully consider any debt settlement offer of insolvents and to accept any invitation to mediation if proposed.

Mediation in Individual Insolvency

The primary interest of all insolvents is for a quick and early discharge from their bankruptcies and for creditors, the early settlement and repayment of their debts.

Mediation has always played a central role in the administration of debt settlement proposals. The OA is therefore provides a wide range of mediation services to insolvents and their creditors through the Bankruptcy Mediation Unit.

The Bankruptcy Mediation Unit

The unit consists of a panel of mediators who assist the parties to reach mutually acceptable resolutions of their disputes through the use of mediation.

The unit provides mediation services to:

1. Resolve the amount of debt owed by the insolvents to their creditors; and
2. Negotiate on debt settlement proposals between the insolvents and their creditors.

Alternatives to Bankruptcy

A. Alternative Arangements for Creditors

Creditors should only commence bankruptcy proceedings after all avenues for recovering debts have been explored and proven unsuccessful, as bankruptcy is not an instant remedy for the recovery of debts.

Reasons to advise creditors why they should not rush to commence bankruptcy proceedings:

• High cost of bankruptcy proceedings
• Full recovery of debts is unlikely
• Loss of interest, as interest on unsecured debts ceases to run upon the making of the Bankruptcy Order
• Effect on insolvent’s earning capacity
• No priority for unsecured creditors
• Discharge may be ordered by the Court or the OA

1. Private arrangements

Creditors should discuss with the insolvent his financial position and work out arrangements for repayment of debts. This may encourage the insolvent finding ways to settle your claim in order toavoid legal proceedings. Debtors who are entrepreneurs also have a fair chance to pull themselves around. A private arrangement may be reached for the purposes of allowing the debtor to pay debts by instalments, reschedule payments or obtaining an extension of time to liquidate assets.

2. Voluntary arrangement

A voluntary arrangement is a formal arrangement between the debtor and his creditors in respect of repaying the debts, subject to supervision by a nominee. The proposal for a voluntary arrangement must provide for the nominee (who must be a registered public accountant, an advocate and solicitor or a person gazetted by the Minister who has consented to being appointed as such), who shall be appointed to supervise the debt and settlement proposal.

If a debtor applies to court to make a proposal for a voluntary arrangement under Part V of the Bankruptcy Act (Cap 20), the creditor should participate in the creditors’ meeting to consider the proposal.

B. Alternative Arrangements for Debtors

Compelling reasons why bankruptcy should be avoided by debtors as far as possible

• Social stigma
• Your assets will become vested in the OA and divisible among creditors
• You must file Statements of Affairs and income and expenditure statements, and your financial affairs will be subject to thorough investigations by the OA
• You must make monthly payments to the bankruptcy estate
• You must disclose your bankruptcy when obtaining credit of >$500
• Your correspondence may be redirected to the OA (Bankruptcy Act (Cap 20), Section 115(1))
• Restrictions on overseas travel; possible impounding of your travel document (Section 116(2))
• You may not manage a business or act as a director of companies without approval of the court or the OA
• Certain behaviour such as gambling, seeking credit or engaging in business may constitute a criminal offense under the Act (Part X)
• Even after discharge from bankruptcy, potential creditors may be dissuaded from granting you credit

1. Private arrangements

Process:A debtor can enter into private arrangements with creditors to pay debts by instalments, to reschedule repayments, or to give extension of time to liquidate assets or seek other financial sources to repay debts.

Responsibility of debtor under private arrangements:Inform creditors truthfully and completely of his latest financial position and provide accurate information and documentary evidence readily to prove one’s current financial position. Debtors should always undertake serious efforts to comply with the new repayment arrangements.

2. Voluntary arrangement

You may apply to court for an interim order for voluntary arrangement under Part V of Bankruptcy Act. You must disclose your assets and liabilities, and make a proposal on how you intend to settle your debts with your creditors. Under no circumstances should any false representation be made or any other fraud committed for the purpose of obtaining the creditors’ approval of the proposed voluntary arrangement.

3. Debt Repayment Scheme

Debtors who have aggregate debts in an amountno greater than S$100,000may be eligible for a Debt Repayment Scheme (DRS) under the provisions of Part VA of the Bankruptcy Act (Cap 20), subject to the approval of the OA. Bankruptcy applications filed before 18 May 2009 are not eligible for a DRS.

If the debtor meets the statutory criteria and is considered suitable for a DRS by the OA, a repayment plan requiring regular debt repayments over a fixed period of time will be reviewed by a OA and further by a meeting of creditors presided by the OA. For the duration of the DRS, the debtor is required to comply with the conditions set out in the plan and failure to do so may prompt the OA to issue a Certificate of Failure of the DRS, after which the DRS will cease and debtor may be declared bankrupt.

4. Court dispute resolution

If you are being sued by creditors in civil proceedings, you may negotiate with creditors for a settlement on repayment of debts and avoid bankruptcy.

How to be Discharged from Bankruptcy

Under the Bankruptcy Act (Cap 20), there are three ways in which the insolvent can be discharged from bankruptcy:

1. Annulment of the bankruptcy order by Certificate of Annulment of the OA
2. Discharge by the Court
3. Discharge by Certificate of the OA

NOTE:There is no automatic discharge in Singapore.

Preliminary steps to a discharge of bankruptcy

a. Advertisement of intention to declare a dividend:In order to ascertain the full extent of your liabilities, the OA is required to advertise your intention to pay dividends to your creditors. The estimated cost of the advertisement is $350 and it will be published in the Straits Times. Creditors have 14 days to file their claims (or proofs of debt).

b. Adjudicating or admitting claims:After the claims of creditors or proofs of debt have been received, you will be asked to examine these claims at the IPTO website and state whether you admit or dispute them. When this is done, the bankrupt will be informed whether he or she has sufficient money to make full payment of his or her debts, or compute the sum of money needed to raise the Offer of Composition or Scheme of Arrangement.

c. Procedures involved in full settlement:If you have sufficient funds to make a full payment, your creditors will be informed of the amount you have admitted as owing them.

• A 100% dividend will be declared to the creditors. The OA will issue
• a Certificate of Annulment to annul the Bankruptcy Order.
• Any surplus monies in the bankruptcy estate account will be refunded

after all fees and bills have been paid.

• 1. Annulment of the bankruptcy order by Certificate of Annulment of the OA

The OA will issue a Certificate of Annulment if the insolvent’s offer of composition, or scheme of arrangement, has been accepted by his creditors, or if his debts have been paid in full.

Offer of Composition is an offer to settle debts by payment of a fixed percentage of the debts to the creditors.

Scheme of Arrangement means to settle debts by paying different percentages of the debts owed to different creditors. For example, one may have to settle the full sum owing to the Comptroller of Income Tax and may make a partial offer to the other creditors.

Acceptance of the composition or scheme must be made by a special resolution approved in writing or passed at a general meeting of creditors, and by a majority of the creditors (in number) that represent at least three-fourths (3/4) of the value of the debt that has been proven.

The OA may also issue a Certificate of Annulment of a Bankruptcy Order under Section 123A of the Bankruptcy Act (Chapter 20) when the debts which have been proved and the expenses of the bankruptcy have been paid as of the issuance of the Bankruptcy Order.

Procedures Involved In Scheme of Arrangement or Offer of Composition

If you do not have sufficient funds for full payment you may still propose a debt settlement plan.

Your proposal will be forwarded to your creditors and they will be invited to accept the offer. The proposal will be deemed as successful if a majority in number of creditors that represent at least three-fourths (3/4) in value of the bankrupt’s debts vote in favour.

Once a majority vote is obtained, the OA will declare a dividend and discharge the bankrupt.

2. Discharge by the Court

The High Court may grant an Order of Discharge under Section 124 of the Bankruptcy Act (Chapter 20) at the request of the bankrupt, the OA or any other person with an interest in the matter.

Notice requirement:Prior to granting a conditional or absolute discharge, notice must be given to and the Court will hear the OA and the creditors before deciding whether to grant the order of discharge or not. The Court will consider such facts as: the bankrupt’s age, earning capacity and assets before deciding whether to discharge him or her.

In addition, the Court will also consider the amount of payments he or she has contributed for the benefit of his creditors, whether any bankruptcy or other offences were committed, and generally, whether the insolvent has co-operated fully with the OA in the administration of the bankruptcy estate.

3. Discharge by Certificate of the OA

Under Section 125 of the Bankruptcy Act (Chapter 20), the OA may, at his or her own discretion, discharge an insolvent provided that a period of 3 years has passed since bankruptcy began and the proven debts are no more than S$500,000. In deciding whether to grant the Certificate of Discharge to an insolvent, the OA will take into consideration, among others, the following factors: the cause and period of bankruptcy, the insolvent’s assets and payments made to the bankruptcy estate, and the bankrupt’s conduct and the level of co-operation with the OA.

It is therefore in the insolvent’s best interests to extend his fullest co-operation to the OA in the administration of the insolvent’s affairs, as this factor will weigh in his or her favour in evaluating discharge from bankruptcy.

Effects of Bankruptcy

Rights and Responsibilities of an Insolvent

1. Filing of Statement of Affairs

Under the Bankruptcy Act (Cap 20), the insolvent is required to disclose fully all his or her assets and liabilities to the OA and submit a written statement of his or her assets and liabilities (known as the Statement of Affairs) within 21 days from the date of the Bankruptcy Order. This Statement of Affairs should be made under oath and in the prescribed form.

The insolvent must ensure that letters from the OA to him or her are answered promptly and that he or she attends at this office whenever required, and that the Income and Expenditure Statements required by the OA are provided on time. Any change in residential address should be promptly reported to the OA. The insolvent has an obligation under the Bankruptcy Act (Cap 20) to assist in the administration of his or her estate and it is in the insolvent’s best interest to do so.

Failure to comply: Failure to comply with the requirements to file the Statement of Affairs, or the submission of a Statement of Affairs that does not comply with legal requirements or that contains false or misleading information is an offence punishable on conviction with imprisonment up to 2 years or a fine up to $10,000 or to both.

2. Income and contributions

If the insolvent is gainfully employed, he or she must make a monthly contribution to his bankruptcy estate for the benefit of his creditors. This will enable the OA to obtain the insolvent’s discharge from insolvency as soon as possible. Please note that the amount of payments the insolvent makes is also an important factor considered by the OA when exercising his or her discretion whether to issue a certificate to discharge him from bankruptcy.

The OA will assess the contribution, if any, that the insolvent will be liable to pay each month out of his or her income after taking into account what he or she reasonably needs to upkeep himself and his family. To assist the OA in making this assessment, he or she must provide on a 6-monthly basis (or as otherwise directed by the OA) an account of all moneys and property which have come to his or her hands for his or her own use during such time, and information about his or her occupation, income and dependants.

To facilitate easy and regular payments of the insolvent’s income contribution, the OA will allow him to operate a savings account and the contribution will be deducted periodically through GIRO.

Failure to comply: Failure to comply with this requirement, or the failure to pay to the OA the amounts that have not been expressly expended for maintenance of the insolvent and his family, is an offence punishable on conviction with imprisonment up to 2 years or a fine up to $10,000 or to both, and in the case of a continuing offense to a further fine of up to $200 per day.

Creditors

Creditors can take no further legal proceedings against the insolvent to recover any debts incurred before insolvency.

Exception: However, a very important exception to this concerns the payment of fines for breaches of the law. A declaration of bankruptcy does not protect the insolvent from the obligation to pay such fines, including taxes due to the Inland Revenue Department, which must be settled even after a discharge from insolvency.

If the insolvent receives any demand for payments, notice of court action from creditors or is approached by creditors to whom the insolvent owed money at the date of insolvency, he should advise the creditors of his status as bankrupt and forward any documents received to the OA.

Secured Creditors

Creditors who hold security (such as banks or other financial institutions to whom the insolvent has mortgaged or pledged property or goods in order to secure credit facilities) over the insolvent’s property or goods have a right to sell such property or goods if the bankrupt does not continue to meet the payments when they are due. If the property or goods are worth more than the amount of money secured against it, any balance from the proceeds of sale after discharging the security will be accredited to the bankruptcy estate and utilised to pay a dividend to other creditors.

Secured creditors should realize their security within 6 months from the date of the bankruptcy order or such extended time as the OA may allow, otherwise they will not be entitled to claim any interest in respect of their debts subsequent to the date of the bankruptcy order.

Insolvent’s Assets

Vesting of the insolvent’s property in the OA

Under the Bankruptcy Act (Cap 20), the OA takes over the title to the insolvent’s assets and has the responsibility to realise them and pay a dividend to the insolvent’s creditors. The insolvent cannot sell or deal with any of his assets or items of value. Only the OA or a secured creditor is able to do so (with respect to the secured property or assets).

• Scope of “assets”:
• Includes anything of value belonging to the bankrupt at the date of insolvency, or obtained by him thereafter and gifts given to him before his discharge from insolvency. The insolvent must deliver up possession of these assets to the OA.
• Protected property

Certain property is protected against the insolvent’s creditors by law, which means it cannot be sold or taken over by the OA. Under the Bankruptcy Act (Cap 20), limited tools of trade and possessions such as furniture, clothing and provisions necessary for satisfying the domestic needs of the bankrupt and his family remain with the bankrupt. Other protected properties include:

• Properties held in trust by the bankrupt, HDB flats (provided at least one of the owners is a Singapore citizen) orCentral Provident Fund (CPF) contributions
• Life insurance policies which are expressed to be for the benefit of the insolvent’s spouse or children
• Compensation awarded for legal actions due to personal injuries or wrongful acts against the bankrupt

1. HDB Flats

Special considerations may apply with regard to HDB flats. For more information please see the section titled Obtaining OA’s Approval To Sell Or Buy A HDB Flat below.

Restrictions on an Undischarged Insolvent

As an undischarged insolvent there are some things the bankrupt cannot do. These include the following:

1. Travelling overseas without the OA’s permission.

(b) Bringing any Court action, other than an action for damages or compensation in respect of personal injuries or wrongful acts against him, without the OA’s permission.

1. Obtaining credit.

(d) Acting as trustee or personal representative without the Court’s permission.

(e) Managing a business or corporation without the Court’s or OA’s permission.

In addition to the above, other offences which relate to fraudulent acts by insolvents and are punishable with imprisonment of up to 3 years or a fine up to S$10,000 or both are prescribed in the Bankruptcy Act (Cap 20), mainly in Part X of the same. These include, among others:

• Non-disclosure of information relating to his affairs and making misrepresentations to the OA, e.g. making material omissions in any statement to the OA, concealment of assets or concealment of books and papers, destruction of books affecting your property or affairs.
• Leaving or attempting to leave Singapore with his property in order to defraud his creditors (absconding with property).

Opening An OA-Assisted Bank Account

Upon his bankruptcy, all the insolvent’s bank accounts will be terminated. The OA will assist him in opening a new savings account. This account will allow cash withdrawals, ATM facilities and GIRO deductions. The following conditions will be imposed when opening the new savings account:

• The insolvent is required to pay his monthly instalments towards his bankruptcy estate via GIRO; and
• He must furnish all information required by the OA in respect of the savings account.

If the above conditions are not complied with, the OA will close the savings account.

• Procedure for opening a bank account and activating GIRO deductions:
• The insolvent will receive a letter from the OA addressed to the bank and a Direct Debit Authorisation (“DDA”) form – the DDA form is to activate the GIRO deductions from the bank account to his bankruptcy estate for the benefit of his creditors
• Within 14 days, the insolvent will have to present the OA’s letter to the bank to open the savings account. He must:

b. Complete the DDA form by filing in item nos. (1) - (5), and ensure that the signature at item (5) matches the signature in the bank passbook.

c. Return the DDA form and the photocopy of the first page of the bank passbook to the OA

• The OA will notify the insolvent once the GIRO facilities is activated. Generally, it will take 8 weeks for the activation to take place.
• Note:

Until reception of notification, the insolvent will have to make his instalment payments via cash or Nets or cash card at the OA’s office.

Making Monthly Instalment Payments Via GIRO

The GIRO deductions from the bank account into the bankruptcy estate account will take place between the3rd - 7th day (1st attempt)or the16th - 20th day (2:sup:`nd` attempt)of each month. The second attempt will be made only when the first attempt to deduct the funds has failed.

Obtaining OA’s Approval To Sell Or Buy A HDB Flat

Property of an HDB flat will not vest with the OA in the event that the bankrupt flat owner is a Singapore citizen, or when a co-owner of the flat is a Singapore citizen.

Application to sell a HDB flat

Obtaining OA Approval:The OA’s approval is required for all applications to sell HDB flats when property of the HDB flat vests with the OA. However, a bankrupt who wishes to use all or part of the proceeds from the sale of his or her HDB flat to pay his creditors may do so. The OA’s Practice Circular No. 1 of 2009 encourages bankrupts that wish to do so to contact their case officer within 2 weeks after their 1st appointment with the HDB so that the OA may assist the bankrupt in offering a debt settlement proposal to creditors.

The OA’s Practice Circular No. 1 of 2009 sets out the requirements for the sale of immovable property that vests in the OA The permission of the OA is required before entering into an agreement for selling the property. The OA will generally not object if the bankrupt is going to sell his flat at or above the valuation price as the proceeds of sale will help get him out of bankruptcy. The OA will assist him to obtain a discharge after the HDB has remitted the sale proceeds for the OA’s administration. Any share of insolvent’s cash from purchasers as deposit/option fee should be forwarded to the OA as well. If part of the net sale proceeds is needed to buy another flat, this should be specified when submitting an application to the OA.

Procedures involved in selling a HDB flat

In order to process the application, the insolvent must submit the following:

• All information relating to the proposed sale.
• Option to Purchase document.
• Valuation Report (not older than 3 months).
• Copy of the title searches at the Singapore Land Authority.
• Latest CPF statements of the property owners.
• Latest statement of accounts from mortgagee bank (if any) and the mortgagee bank’s written statement of consent to the sale.

Buying an HDB flat

The OA has no objection to the insolvent buying an HDB flat but he should not be seen to be maintaining an ostentatious lifestyle while debts remain unpaid. A bankrupt will therefore, generally, not be allowed to purchase a HDB Executive/Maisonette flat. For purchase of a HDB Executive/Maisonette flat, he must show that he has both the means and the need for such a flat. His conduct and co-operation will also be considered when assessing such applications.

Procedures involved in buying a HDB flat

In order to process an application to purchase an HDB flat, the insolvent is required to submit the following documents to the OA:

a. Application To The OA To Buy A HDB Executive/Maisonette Flat (application forms for the purchase of an executive flat or maisonette are available online)[83],and

1. Latest CPF statement of the applicant and co-applicant.

Applications By Insolvents To Manage A Business Or Act As Director

Principle:It is important that an insolvent remains economically productive even during insolvency as this will allow him to settle his debts earlier and be discharged from bankruptcy quickly. It will also allow the insolvent to continue contributing economically to society. It is for these reasons that the law has been amended to make it easier for an undischarged insolvent to engage in business or trade, take part in the management or act as director of a company or business, especially if he is experienced in business.

An undischarged insolvent may apply to the High Court or to the OA for permission to take part in or to be concerned in the management of any business or company or to act as a Director of a company. Please note that it is an offence punishable with imprisonment of up to 2 years, a fine not exceeding S$10,000, or both, for an undischarged bankrupt to directly or indirectly take part in or to be concerned in the management of any business or company or to act as Director of a company without the leave of the High Court or the written permission of the OA, under Section 26(1) of the Business Registration Act (Cap 32) and Section 148(1) of the Companies Act (Cap 50).

1. Applying for the OA’s permission

The OA’s permission must be sought in order to:

1. Directly or indirectly take part in or be concerned with the management of any business carried on by a person required to be registered under the Business Registration Act (Cap 32);or

2. To act as director or directly or indirectly take part in or be concerned with the management of any corporation (Singapore or foreign company) under the Companies Act (Cap 50).

2. Relevant Forms Required

An application for the OA’s written permission should be made using eitherForm B-ARC-B(for managing a business under the Business Registration Act (Cap 32)) orForm B-ARC-C(for acting as director or managing a company pursuant to the Companies Act (Cap 50)). Both forms may be accessed via the IPTO website[84].

The relevant form must be submitted with the documents indicated, including, amongst others:

• People’s Profile Printout of the insolvent from the Accounting & Corporate Regulatory Authority (“ACRA”).
• Company or business Profile Printout from ACRA.
• Latest audited accounts or financial statements of the company or business;

and

• Letter from the other director(s) or partner(s) and the sponsor indicating they are aware of the bankruptcy order and have

no objectionsto the bankrupt being a director and/or managing the company or business.

3. Processing of the application

The undischarged insolvent’s application will first be assessed by an Application Review Committee (ARC) comprising of Legal Officers, Senior Insolvency Officers and Accountants.

It will be processed within 2 weeks of the submission of all relevant documents and information for insolvents categorised in the Green Zone.

Each application will be considered on its own merits. In deciding whether or not to grant the application, the OA will take into consideration a number of factors including:

• Cause of the individual’s insolvency.
• The insolvent’s conduct before and during insolvency.
• The insolvent’s previous involvement in business or company.
• The nature and the viability of the proposed business or company.
• The nature of insolvent’s involvement in the business or company.
• Benefits to creditors from the insolvent’s involvement in the business or company.
• The risk of the insolvent incurring more debts as a result of management activities.

As provided by law, the OA may refuse or approve the application subject to conditions such as he may impose. Such conditions may include maintaining proper accounting records, making regular payments to the bankruptcy estate from income or profits of the business or company for the benefit of creditors.

The applicant should contact their Case Management Officer for further information.

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