Simplified Insolvency Programme (“SIP”)
The Insolvency, Restructuring and Dissolution (Amendment) Bill 2020 (“Bill”) will be introduced this month and it will establish the SIP. Under the SIP, qualifying micro and small companies (“MSCs”), which are companies with an annual revenue of less than $1 million and $10 million respectively, can benefit from the two simplified but temporary processes that has been adapted from the existing framework in the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”). These processes are the simplified debt restructuring and simplified winding up programme. It is envisioned that the SIP will provide simpler, faster and lower-cost proceedings.
To qualify for the SIP, an MSC must fulfill the following requirements:
- An annual sales turnover which does not exceed $10 million;
- 30 or fewer employees;
- 50 or fewer creditors;
- A maximum of $2 million in liabilities; and
- Any other criteria that may be prescribed.
Simplified debt restructuring
The Bill allows MSCs to resort to a pre-packaged scheme of arrangement (“Pre-Packaged Scheme”). A typical scheme of arrangement requires two applications to the High Court -one for leave to convene a creditors meeting to consider a proposed scheme and another for approval of the said scheme (once the requisite creditor approvals are obtained).
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