The legislative framework for Singapore's insolvency regime is derived from English legal tradition. According to a variety of sources, the system is efficient and inexpensive. In recent years, the core insolvency legislation, the Insolvency Act and the Companies Act, have been amended in order to remain in step with international practice, particularly as it evolved in England. The year 2006 saw the launch of the Insolvency Practitioners Association of Singapore (IPAS), a professional association established to perform both supervisory and advisory functions within the profession. The IPAS also provides educational opportunities and maintains a library of resources for use by professional insolvency administrators and practitioners. The World Bank's "Doing Business" snapshot of Singapore's business closing practice discloses that Singapore's practice compares quite favorably to the average experience in both the region and among Organization for Economic Cooperation and Development (OECD) member states. It takes 0.8 years on average to complete the closing process in Singapore, compared to 2.7 years for the region and 1.3 years for member states of the OECD. The cost of the procedure is 1% of the estate, on average, in Singapore, compared to 23.2% for the region and 7.5% for the OECD. Return to the creditors runs, on average, 91.3 cents on the dollar in Singapore, only 28.1 cents for the region, and 74.1 cents for the OECD member states. However, there is insufficient publicly available information that specifically addresses Singapore's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank.

General Overview

The legislation governing Singapore's insolvency regime comprises the Bankruptcy Act and the Companies Act, which is based on English law. According to a 2001 report by Wong Partnership for the Asian Development Bank (ADB), Singapore's corporate bankruptcy and statutory framework is "well established" and "comprehensive" (p. 105). The Wong Partnership report added that Singapore has developed its insolvency regime to stay in step with international developments. The report further noted that Singaporean courts have been effective in the application of the insolvency regime, maintaining a balance between creditor protection and the preservation of distressed but otherwise viable debtor businesses.

Singapore's Companies Act was first enacted in 1967 and amended several times since then. As the Wong Partnership publication points out, it contains provisions to permit restructuring or rescue of troubled but otherwise viable firms. The Bankruptcy Act of 1995 has built on this focus, according to the Singapore Member Profile on the website of the International Association of Insolvency Regulators (IAIR). The IAIR website noted that Singapore's Bankruptcy Act "simplifies previously cumbersome and complex procedures and increases the powers of the Official Receiver or Assignee to inquire into the bankrupt's affairs and conduct." It introduces an official assignee's "certificate of discharge," described by the IAIR as "innovative," which aims to expedite the discharge process. In the words of the IAIR report, reforms to the Bankruptcy Act in recent years have "aimed to make bankruptcy less probably, less prohibitive, and less prolonged." According to the IAIR website, overall management of corporate insolvency falls under the general authority of the Ministry of Law, specifically to the Insolvency and Public Trustee's Office (IPTO), which is headed by the Official Receiver. In the rare case that is administered by a private trustee or private liquidator, such administrators must receive the Ministry of Law's approval and are recognized for three-year terms. Singapore's High Court is the judicial authority, with the power to order a bankruptcy, initiate prosecution against violators of bankruptcy requirements, and issue arrest warrants when necessary.

In its brief (one page), undated report on the Singapore Bankruptcy Act, the International Insolvency Institute noted that recent amendments to the Companies Act and the Business Registration Act have included the loosening of restrictions on debtors to serve as directors of companies or to act as managers of other businesses; to encourage greater use by debtors of voluntary arrangements; and to alter the rules by which the Official Assignee or Receiver can carry out his or her discharge function. Provisions have been added to streamline debt settlement and discharge application procedures. Additionally, higher debt levels were set for the inauguration of insolvency proceedings, in order to protect companies from being forced into bankruptcy proceedings for unreasonably low debt amounts.

According to the IPTO website, the agency's role is to "provide quality and innovative services in the administration of individual and corporate insolvency and to assist creditors and the community in dealing with the impact of individual and corporate financial failure." To do this, the IPTO seeks to promote fairness, efficiency, and effectiveness in the administration of corporate insolvency proceedings, conduct ongoing reviews of current legislation to maintain its relevancy, and expedite the recovery and asset distribution processes. It also commits to staff development. It publishes periodic informative documents on its website to explain changes in bankruptcy and insolvency law and practice to the public.

In a 2004 publication by the Organization for Economic Cooperation and Development (OECD), it was reported that "Singapore was considering proposals for what is called the new Omnibus Insolvency Legislation" (p. 14), prompted by a high-profile bankruptcy case that suggested the need to reconsider corporate voluntary arrangement procedures. Writing for the Asian Development Bank's "Regional Development Assistance Project," author S. S. Gill adds that draft legislation is in circulation that is aimed at creating "a non-statutory and informal framework for dealing with temporary support operations mounted by banks and other lenders to a company or group in financial difficulties pending a restructuring." The undated Gill document also attempts to rate Singapore's performance in a variety of aspects of insolvency practice, including securing landed and non-land assets used as security, debt collection, and the liquidation. According to Gill, Singapore earns high marks in terms of cost and efficiency on all these dimensions.

In 2006, the Insolvency Practitioners Association for Singapore (IPAS) was launched, with the stated mission of providing a professional organization that would help to support the profession, provide supervision over its members and, according to the IPAS website, "establish rules for observance in matters pertaining to codes of professional conduct and practice and the award of certificates and qualifications." Additionally, IPAS seeks to take a professional supervisory and advisory role, including the consideration of new legislative initiatives, and to encourage research into the theory and practices that underlay the insolvency profession. To this end, IPAS sponsors seminars and other educational activities, supports research, and maintains a library of resources for the use of professionals in the field.

The World Bank's "Doing Business" snapshot of closing a business in Singapore bears out other reports, such as that of Gill for the ADB, that the insolvency regime, at least in this regard, is inexpensive and efficient. The World Bank uses three indicators to assess countries' closing-a-business processes: time (in years), cost (as a percentage of the debtor estate), and return to creditors (expressed in cents on the dollar). In Singapore, it takes 0.8 years on average to complete the closing process, compared to 2.7 years for the region and 1.3 years for member states of the Organization for Economic Cooperation and Development (OECD). The cost of the procedure is 1% of the estate, on average, in Singapore, compared to 23.2% for the region and 7.5% for the OECD. Returns to creditors average, 91.3 cents on the dollar in Singapore, only 28.1 cents for the region, and 74.1 cents for the OECD member states.