SINGAPORE — The passing of the Insolvency, Restructuring and Dissolution (Amendment) Bill on Tuesday (10 Jan) will see the administration of all bankruptcy cases in Singapore by private trustees appointed by creditors except those of public interest.
Second Minister for Law Edwin Tong, in the second reading of the Bill, claims that the amendments in the bill will simplify, expedite, modernise and cut the cost of insolvency procedures.
Only in cases of public interest – such as the misuse of public funds, significant debts owed to the Government or unpaid taxes, an official assignee (OA) may consent to act as the trustee in the bankruptcy case.
However, the Ministry of Law notes that such public interest cases are estimated to constitute only about 1 per cent of the annual caseload.
Is there possibly, a potential conflict of interest, as I understand that these private trustees may be remunerated in relation to the sums which they are able to recover from the bankrupts?
In contrast, in the case of the Official Assignee, all the staff are salaried civil servants.
I understand that 10 per cent of the sums recovered are retained by the Official Assignee, with 90 per cent to the creditors.
The following is a recent volunteer financial counselling case, which I handled.
The private trustee company asked the bankrupt to pay S$1,500 monthly, even though the 67-year-old bankrupt was unemployed, and his only income was S$1,115 monthly from his Central Provident Fund (CPF) payouts.
The bankrupt had been working in China for about 24 years before he was made bankrupt as a guarantor for a loan to his employer in the company in which he was a director.
He had wanted to travel to China to work so as to earn an income to make monthly payments towards his outstanding sum and had submitted documents to the private trustee company, to allow him to travel.
However, the application was rejected as there was a shortfall of S$13,750 in his contribution (based on the initial amount of S$1,500 monthly that he was asked to pay, which he did not agree to, as he was only able to pay S$400 monthly), and he had to pay at least S$10,450 if he was to travel.
His application to travel to work is to allow him to travel to China to work with its coming opening after being closed since 2019.
Having been living on his pension for the past three years, he now has a chance to work in China again, as he has done in the past for about 24 years, to earn income so that monthly bankruptcy payments can be made to the trustee company.
From my experience doing volunteer financial counselling at the Official Assignee, for about ten years (from around 2008 to 2017), on Tuesday mornings (volunteers from the Society of Financial Service Professionals) — my understanding is that as a matter of normal practice — the OA will not normally require back-payments, as a condition to travel for work to earn income, when the bankrupt has been making monthly, a reasonable amount based on the statement of (financial) affairs filed by the bankrupt, and his changing financial circumstances and situation where he was unable to pay the $400 for two months in November and December 2022, due to unusual temporary circumstances.
Also, CPF payouts are protected from creditors.
Email correspondence between the bankrupt and the private trustee
