Information for Creditors

      

•   1. What is bankruptcy?
  Bankruptcy is a process by which a borrower of money is declared by the High Court to be unable to repay the loan and recovery of the loan is conducted in an orderly manner. The High Court usually appoints the Official Assignee to administer the bankruptcy estate which includes the selling of assets, registration of creditors' claims and paying dividends to a bankrupt’s creditors.
•   2. Should I petition for bankruptcy?
  You should only commence bankruptcy proceedings after all avenues for recovering debts have been explored and proven unsuccessful. It is not an instant remedy for recovery of debts
  
  Here are some reasons why you should not rush to commence bankruptcy proceedings:
  
  It is costly
  
  It is expensive to commence bankruptcy proceedings. A petitioning creditor has to pay:
  
  

  • a deposit of $1,600 with the Official Assignee for the administration of the bankrupt's estate;
  • legal costs and disbursements of the bankruptcy proceedings; and
  • further litigation costs for recovery of bankrupt's assets, if necessary.

  
  Full recovery of debts unlikely
  Unless the bankrupt has assets that can be realised by the Official Assignee, a full recovery of debts is unlikely in the vast majority of cases.
  
  Loss of interest
  Interest on unsecured debts ceases to run upon the making of Bankruptcy Order. Secured creditors are not entitled to any interest on their debts after the making of the Bankruptcy Order if they do not realise their securities within six months from the date of the Bankruptcy Order.
  
  Effect on bankrupt’s earning capacity
  Once a debtor is made a bankrupt, it may affect the bankrupt’s earning capacity adversely and in turn, the bankrupt’s ability to settle debts.
  
  No priority for unsecured creditors
  Unsecured creditors rank after secured and preferential creditors (such as, the Comptroller of Income Tax and CPF Board) in receiving dividends from bankrupts’ estate. Unsecured creditors have to share the balance dividends, if any, equally amongst themselves.
  
  Discharge by the Court and the Official Assignee
  Bankrupts cannot be held in individual bankruptcy perpetually until their debts are fully settled. For example, in cases where bankrupts have done their best to make payments and have no assets, or are old, sick and unemployed, the Court may, upon application by the Official Assignee, the bankrupt or any interested person, discharge the bankrupt.
  
  The Official Assignee may also, in his discretion, issue a certificate discharging a bankrupt who has been in individual bankruptcy:
  
  

  • for more than three years and;
  • has debts which do not exceed S$500,000 and;
  • has maintained good conduct during the period of bankruptcy

  
  A discharge by the Court or by a certificate issued by the Official Assignee, releases a bankrupt from all debts provable against him, save for a few exceptions. Creditors would not be able to pursue their claims against the insolvent person any further.
•   3. What are the alternatives to bankruptcy?
  You and your bankrupt may use one of the alternative processes to avoid bankruptcy.
  
  

  • Private Arrangement
  • Voluntary Arrangement

  
  
  Private Arrangement

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  You should discuss with your bankrupt about his financial problems and work out arrangements for repayment of debts. This will also encourage him to find ways to settle your claim and avoid legal proceedings. Debtors who are entrepreneurs would also have a fair chance to pull themselves around.
  
  
  Voluntary Arrangement

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  If your debtor applies to court to make a proposal for voluntary arrangement under Part V of the Bankruptcy Act, you should participate in the creditors' meeting to consider the proposal. A voluntary arrangement is essentially a formal arrangement between the debtor and his creditors in respect of repayment of debts.
  
  The debtor has to disclose his assets and liabilities, and propose ways of settling his debts. If the voluntary arrangement is accepted by creditors and implemented successfully, it will benefit both creditors and debtor. If not, the debtor runs the risk of bankruptcy.
•   4. What is the Debt Repayment Scheme?
  The Debt Repayment Scheme (DRS) is a repayment scheme to assist debtors, who have a regular income and debts not exceeding S$100,000, avoid bankruptcy.
  
  The DRS is triggered by a bankruptcy application. When such an application is made to the Court and the debt owed does not exceed S$100,000, the Court shall refer the debtor to the Insolvency and Public Trustee’s Office for an assessment of the debtor’s eligibility and suitability to enter into the DRS. If the debtor satisfies the relevant criteria, an administrator will devise a repayment plan requiring regular debt repayments to the creditors over a fixed period of time. While in the DRS, the debtor must comply with the conditions set out in the plan.
•   5. Are there any costs in filing a bankruptcy petition?
  Under the Bankruptcy Fees Rules, any creditor who wishes to file a bankruptcy petition in the Court must pay a deposit of S$1,600 to the Official Assignee for the administration of the bankrupt’s esate. You may recover your deposit from the bankrupt if there are sufficient funds in the bankrupt’s estate
  
  In the event that a bankruptcy petition is withdrawn or dismissed by the Court, the Official Assignee will retain S$250 as preliminary administration costs under the Bankruptcy Fees Rules and refund S$1,350 to the petitioning creditor.
•   6. Can I file a monetary claim against a debtor who has been made
  bankrupt?
  Once a debtor is declared bankrupt by the Court, you can no longer commence or continue with any legal action against the bankrupt to recover monetary claims that arose before the bankruptcy.
  
  Instead, you can submit a Proof of Debt (Form 23) to the Official Assignee and give an account of your claims against the bankrupts. Debts that are incurred after the date of Bankruptcy Order are not provable (claimable) against the bankrupt's estate. If there is a dispute by the bankrupt over the sum claimed, you will be asked to provide supporting documents. If you are the petitioning creditor, you should also file a Proof of Debt against the bankrupt. Creditors who change their address after filing their Proof of Debt must notify the Official Assignee
•   7. How do I file a Proof of Debt (Form 23)?
  • You can file the Proof of Debt manually or electronically.
  • If you would like to lodge your claim electronically, you may do so here. Alternatively, you can download the Proof of Debt form (Form 23) and file the form manually.
    
    The Official Assignee
    Insolvency & Public Trustee's Office
    The URA Centre, East Wing,
    45 Maxwell Road, #06-11 Singapore 069118
    Tel : 6325 1500  |  Fax : 6325 1417
  • The Proof of Debt should reflect the bankrupt’s information such as the bankrupt’s name, bankruptcy number and the creditor's particulars including name of creditor, amount owed and nature of the claim.
  • Documents such as Invoices and Judgments are to be furnished to the Official Assignee's Office to support your Proof of Debt. Please quote the e-filing no. and the winding up no. of the company when you submit the supporting documents. Proofs of Debt without any supporting documents might be rejected.
  • For online submission of Proof of Debt over the Internet, S$5.00 is payable. For manual submission, S$8.00 is payable at the Official Assignee’s Office by Nets or Cash Card.
•   8. Can I take further legal actions against a bankrupt?
  You cannot take further legal proceedings against your bankrupt to recover any debts incurred before bankruptcy. An important exception involves fines for breaches of the law. Bankruptcy does not protect a bankrupt from payment of these, including taxes due to the Inland Revenue Authority of Singapore, which has to be settled even after being discharged from bankruptcy.
•   9. What are my rights as a secured creditor?
  If you hold security (e.g. bank or other financial institutions) over a bankrupt’s property or goods, you have a right to sell the property or goods if your bankrupt does not continue to meet the payments when they are due. If the property is worth more than the amount of money secured against it, any balance from the proceeds of sale after discharging the security will be used to pay a dividend to you. You should realise your security within six months from the date of the bankruptcy order or such extended time as the Official Assignee may allow. Otherwise, you will not be entitled to claim any interest in respect of your debts subsequent to the date of the Bankruptcy Order.
•   10. What type of property is protected from creditors?
  Certain property is protected against creditors by law, which means it cannot be sold or taken over by the Official Assignee. Such properties include trust property, HDB flats, CPF contributions, necessary household furniture, personal effects, limited tools of trade, life insurance policies which are expressed to be for the benefit of the bankrupt’s spouse or children and compensation awarded for personal injuries or wrongful acts against the bankrupt.
•   11. When will I receive the dividends from the bankruptcy estate?
  Notices will be published in The Straits Times to inform you of the Official Assignee's intention to declare dividend to creditors. This is done when there are sufficient funds in the bankruptcy estate for the bankrupt to make a debt settlement offer. You are advised to consider any debt settlement offer of bankrupts seriously and to accept any invitation to mediation if proposed.
•   12. How do I contact the Official Assignee?
  Click here to contact Official Assignee
•   13. Other suggested reading
  Information for bankrupts