Bankruptcy Process in Singapore
Questions:
1.Bankruptcy definition of process Enforcement of process Restriction measures discharge of Bankruptcy.
2.Adjudication adjudication procedures adjudication appointment &determination determanation order & Review Adjudication Enforcement.
This paper intends to research into and subsequently presents a comprehensive discussion of the bankruptcy process in respects of an individual insolvency in Singapore. The discussions entail the origin of the insolvency, enforcement, restrictions for the individual bankrupt including the range of options of discharging as well as annulling bankruptcy order. The chosen firm to help expand this discussion is Ezra Holdings.
Overview:
Bankruptcy denotes a legal status of an individual firm or person who is unable to make repayment of debts over $15, 000 and is already declared by the High Court as a bankrupt. The Official Assignee is appointed by the High Court to particularly administer the affairs of the bankrupt in the bankruptcy (Agarwal, He, Sing and Zhang 2016). The Official Assignee administers such affairs as selling off the assets of the bankrupt to pay its creditors, registering claims of the creditors and distribute dividends to the creditors of the bankrupt (Peng, Yamakawa and Lee 2010).
Origin
The bankruptcy follows the prolonged offshore downturn, marine, and oil and gas industry. This has caused Singapore-based Ezra Holdings to sought Chapter 11 protection with the US bankruptcy courts. At the time, it stood unclear whether Ezra Holdings would “go under”. Ezra Holdings filed for the Chapter 11 protection nearly three weeks later following EMAS application on 27th February 2017 for the same. This is because Ezra Holdings owns a forty percent share of EMAS. The twenty largest creditors of Ezra were owed nearly US$600 million. Ezra announced to the Singapore Stock Exchange (SGX) on 19/03/2017 that the Chapter 11 filing was meant to “optimize both scope and extent of options available restructuring and the protection of the company stakeholders’ interest. Ezra Holding was concerned as besides restructuring, EMAS was seeking to terminate 5 charterparties. These included the LEWEK CHAMPION, the 25,000 GT pipe-layer. This was then under arrest in China and LEWEK EXPRESS. Such contracts were reportedly valued over 300 million USD in the remaining charter hire payment. Thus, keeping such charters alive would be of little gains to the estate (Chua and Bedford 2016).
The offshore supply vessels oversupply and newly built vessels influx culminating in low competitive rates of charter worsened the financial challenges of the business division of Ezra Holdings. This made the Ezra debts to surge including unsecured loans amounting to $272 million from DBS Bank Ltd, $184 million from Oversea-Chinese Banking Corp Ltd alongside $108 million owed to a Singapore affiliate of HSBC Plc. Moreover, Ezra Holdings stock lost 20% of its value following a disclosure in March 2017 that it provided almost 900 million guarantees in loans and liabilities of EMAS CHIYODA SUBSEA Ltd. Ezra Holding thus faced a “going concern issue” despite attempts to restructure (Azmi, Razak and Ahmad 2017).
Case Study of Ezra Holdings
Enforcement
In Singapore, the Bankruptcy proceedings start by means of filing of a Bankruptcy Application to High Court. In this case, it was filed by Ezra Holdings (debtor) and not a creditor (owed $15,000 or more by a debtor). Ezra Holding (debtor) filed the application to be the company bankrupt. A statement of affairs was filed alongside Bankruptcy Application. For example, Ezra Holdings indicated in its statement of affairs that it had $1B in assets and up to $500 million in liabilities.
To enforce the application, Singapore sets the hearing of a Bankruptcy Application around four to six weeks from date of filing of the Application. Once a Bankruptcy Order is made against Ezra Holdings, notification shall be published in Singapore Government Gazette. Subsequently, the Court-appointed Official Assignee/private trustee in bankruptcy administers the affairs of the Ezra Holdings in bankruptcy (Chan 2016). The Official Assignee then contacts Ezra Holdings to go for briefing in his office. At this point, Ezra Holdings will be subjected to a number of disabilities and disqualifications. The case then undergoes commencement of an action, pre-trial matters, trial, post-trial matters and the appeal process, if required (Alexander 2016).
Restrictions for Bankrupt:
Once a firm has been declared bankrupt by the High Court, it was unable to begin or continue legal actions in the court in absence of the permission of the trustee. The firm cannot act as a trustee or even personal representative in absence of the permission of the court. The firm can no longer deal in property (Saba and Rahman 2016). The officials involved are unable to travel or even live/stay in foreign countries unless permitted by the trustees. Further, the firm cannot obtain any credit unless it discloses its bankruptcy status. The business will be unable to neither act as director of a company nor engaged in the management of any business unless permitted.
Options for: Discharging and Annulling Bankruptcy Order
Under the novel framework for bankruptcy schemes in Singapore, established in 2016 August, there is assistance for navigation of first-time bankrupts out of the debt. A first-timer might be discharged within 3 to 5 years, in case the firm has been able to make repayment of the full target contributions, without threshold of creditors refuting the discharge. However, the discharge could take a slightly extended period of 5 to 7 years, in case the bankrupt only pays the target contribution in full, but still, the court rejects the objections of the creditors to discharge. In both scenarios, the name of the bankrupt would be detached from the public records after 5 years from the time of discharge. However, where the bankrupt remains unable to repay debts after 7 years, the name will stay permanently in the public records (Cheah, Ho and Lim 2016). There are 4 different methods of discharging bankruptcy solely available for bankruptcy applications filed in or beyond 2016, August 1. These include paying off all outstanding debts; making a proposal to creditors for the debt repayment; application to the court for discharge order and discharging by Official Assignee’s certificate.
Discharge Options for Bankruptcy
Paying off all the outstanding debts remains the swiftest method of discharge. When the bankrupt does this the Official Assignee or the Court is able to issue a certificate which annuls the bankruptcy order. Subsequently, the bankrupt’s name is removed promptly from the bankruptcy register on the annulment date.
A bankrupt can also make a proposal to creditors to repay the debts. This is done at the Ministry of Law Website under the “Application for Discharge from Bankruptcy”. The proposal has to be accepted at the general meeting by at least half in a number of the creditors of the bankrupt, who hold a minimum of seventy-five percent in debt value. In case the bankrupt meet such a threshold, the Certificate of Discharge is then issued by the Official Assignee to discharge the bankrupt from the bankruptcy. Nevertheless, the bankrupt’s name shall only be detached from the register of bankruptcy after five years from the discharge date and only once the debts have been repaid in full (Azmi, Abd Razak and Ahmad 2017).
Nonetheless, where all the creditors approve the proposal in unison, the Official Assignee shall subsequently issue the Certificate of Annulment. This permits the bankrupt’s name to be instantly detached from the bankruptcy register at the annulment date. However, obtaining either the certificate is never the end of story. The bankrupt must repay the debts in accordance with the proposal subsequently. Otherwise, any creditor or Official Assignee is able to make application to revoke the annulment or discharge from bankruptcy.
The third method of discharge is to apply to the Court for the Discharge Order accompanied by the affidavit. The affidavit must state whether the bankrupt has filed its statement of affairs; the creditors’ number alongside whether creditors have proven respective debts. The affidavit must further state whether the bankrupt has disclosed all its assets to the Official Assignee or trustee that is managing its affairs and whether such assets are already realized. The affidavit must further state whether the bankrupt’s dividends have already been declared and if yes, the dividend’s amounts; and the reason for applying for the Discharge Order. The bankrupt must then serve its application together with the affidavit copy by the trustee or Official Assignee managing its affairs (Golden 2017). The Court will then evaluate the application taking into consideration; amount of debt, cause of bankruptcy and the much the bankrupt was at fault for debt incurrence, bankrupt’s domestic, financial and social conditions, bankrupt’s conduct, bankrupt’s interest in being discharged, and creditors interest in getting repaid; and whether creditors have objected to discharge applications. Where the order for discharge is granted by the Court, the bankrupt gets discharged from bankruptcy (Eckbo, Thorburn and Wang 2016). The bankrupt’s name will then get detached from the register of bankruptcy after five years following the discharge and only when the debts have been repaid in full. However, things become complicated in case of “special facts” in the application/case. For example, where a bankrupt has committed Bankruptcy Act Offences/offenses linked to fraudulent property distribution under the Penal Code, there will be “special facts”. Other “special facts” are highlighted in s. 125 (5) of Bankruptcy Act which makes it unlikely for the Court to grant the bankrupt a discharge order when proven. Even in the absence of such order, still, the bankrupt’s order will be subjected to conditions like bankrupt being needed to make a partial repayment to its creditors.
Conclusion
The Discharge by Certificate of Official Assignee method can also be used where the Official Assignee issues the bankrupt with a Certificate of Discharge. Nevertheless, a bankrupt can never apply for Official Assignee Certificate. Such a certificate shall solely be granted where the Official Assignee deems it fit, when these two conditions are met: (i) The bankrupt must have either paid the target contribution in full or are proven incapable of paying as a result of some extenuating conditions and (ii): A certain validity duration must have gone following the bankruptcy administration date.
Introduction:
As a Consultant Project Manager engaged by subcontractor, Bui Gong Pte Ltd with a claim dispute with major contractor about final payment settlement of a Main Upgrading HDB project in Singapore, I seek to undertake study in the Security of Payment Act 2004 (SOPA) and subsequently present a comprehensive advise to the subcontractor on procedure for adjudication according to SOPA 2004.
Adjudication Procedure:
Adjudication is a kind of ADR (Alternative Dispute Resolution) broadly used in the construction sector. It permits disputes to be resolved by adjudicators relatively faster whereas work progress (Mewomo and Maritz 2017). The decision of the adjudicator remains to bind, unless and till the dispute is eventually determined by arbitration, legal proceeding or parties’ agreements. However, parties could accept the decision of the adjudicator as eventually determining the dispute. Under the Singapore Security of Payment Act, claimants always lodge their claims with recipients.
However, a limited number of days exist for the recipient to undertake the assessment and formally give their replies to a written claim. Failure to respond formally to a claim under stipulated schedule indicates a “sudden death” nuance to adjudication system and may lead to full amount judgment. Where a matter is challenged, the adjudicator will have the matter referred to him. Again, he (adjudicator) must operate under stringent schedule with to formulate the adjudicated determination (Raji, Mohamed and Mohammed 2017). The major patrons of adjudication system include construction sector sub-contractor lodging claims against respective builders and to a lower degree builders lodging claims against corresponding principals.
Procedure:
Bui Gong Pte Ltd can loge the claim with adjudicator to determine the dispute with the major contractor about final payment settlement of a Main Upgrading HDB project in Singapore. Under SOPA, my client is able to benefit from the statutory right provided by SOPA where an individual who had performed construction work is entitled to make a progress or payment claim (Ali 2016). My client is hence entitled to serve a “payment claim for the month of work under the duration which is outlined in the construction contract. In this case, my client is the claimant and he is entitled to make such based on SOPA prescribed details for all works and costs emerging out of, under as well as in accordance with a construction contract.
Once the claimant has served a valid payment claim on the party “liable to make a progress payment”, as provided for in section 2 of SOPA, the adjudication process is set in motion in Singapore under SOPA. The respondent must then serve a valid payment response upon my client, according to the specified date in the construct (max 21 days). Where there is no date specified, payment response has to be done within seven days from point of payment claim receipt. The respondent has to give in full his reasons for payment withholding specified in the claim alongside his calculation to buttress his reasons.
If the respondent fails to respond leads to draconian aftermaths for him. These include being deemed to have automatically conceded to the adjudication order on payment claim; will be unable to depend on any extra ground before an adjudicator and; adjudicator doesn’t lack “jurisdiction” and is hence excluded from taking into account, any particular reason entailed in payment respond (Todd and Ezeani 2016). The service of payment response provokes a statutory dispute settlement duration of 7 days when my client is able to seek clarification from respondent arising from his response and negotiate the settlement of payment claim dispute. The respondent is permitted to serve a response upon claimant; where he hadn’t done so earlier, as dictated by s.11 (1) of SOPA (Ibrahim 2016).
The service also provokes entitlement of my client to begin the adjudication application as provided for in s. 13 (1) of SOPA where my client doesn’t ‘receive’ “payment” by scheduled date of response amount that my client already accepted, or if my client disputes response given, or where the respondent doesn’t provide a response within statutory stipulated duration (Abraham and Sivanesan 2014). Upon the end of statutory dispute settlement duration of 7 days, or upon failure by the respondent to make payment of accepted payment response, under a scheduled timeframe, my client remains entitled to “make the adjudication application” with “authorized nominating agency” adhering to all conditions as under s. 18.10 (1-4).
After receiving adjudication application alongside “adjudication fees”, nominating body undertakes its role as given in s.18.11. My client is entitled under s. 18.12 to withdraw his adjudication application anytime, via service of a notice of withdrawal upon adjudicator, respondent and authorized nominating body. Under s. 18.13, the respondent must file adjudication response to adjudication application of my client with nominating body under 7 days from its receipt from nominating body. Under s. 18.14, statutory adjudication then commences instantly following expiry of timeline for adjudication response filing by respondent. Section 18.25 through 18.28 set in to guide adjudication determination process (Jayasinghe and Ramachandra 2015).
In conclusion, s. 18.29 details the adjudication determination. Here, a valid adjudication determination has to comply with such conditions as made within as well as according to the stringent schedule outlined in s. 17 (1) (a) and (b); made in writing; entail each reason for determination; and be an ultimate determination, unamendable by the adjudicator, except for minor mistakes (clerical), omissions/accidental slip or form defect.
References
Abraham, W. and Sivanesan, S., 2014. Construction Industry Payment and Adjudication Act 2012-Will the Act Improve Cash Flow in Malaysia. Const. L. Int’l, 9, p.9.
Agarwal, S., He, J., Sing, T.F. and Zhang, J., 2016. Gender Gap in Personal Bankruptcy Risks: Empirical Evidence from Singapore. Review of Finance, p.rfw063.
Alexander, K.H., 2016. Guidelines to New Chapter 15 Forms. Insolvency & Restructuring Int’l, 10, p.22.
Ali, N.A.N.A., 2016. Statutory Construction Adjudication: Analysis of the New Zealand and Malaysian Legislations(Doctoral dissertation, University of Auckland).
Azmi, R., Abd Razak, A. and Ahmad, S.N.S., 2017. Discharge in bankruptcy: a comparative analysis of law and practice between Malaysia, Singapore and the United Kingdom (UK)–What can we learn?. Commonwealth Law Bulletin, pp.1-31.
Azmi, R., Razak, A.A. and Ahmad, S.N.S., 2017, November. Debts Repayment Scheme and Debts Repayment Plan in Singapore and Malaysia: A Legal Overview. In International Research Symposium Series (IRSS) (p. 61).
Chan, A., 2016. Global and Regional Practices in Financial Restructuring and Bankruptcy Laws: Lessons to Be Learned from Singapore. In Global Insolvency and Bankruptcy Practice for Sustainable Economic Development (pp. 219-264). Palgrave Macmillan, London.
Cheah, S., Ho, Y.P. and Lim, P., 2016. Role of public science in fostering the innovation and startup ecosystem in Singapore. Asian Research Policy, 7(1), pp.78-93.
Chua, H.S. and Bedford, O., 2016. A qualitative exploration of fear of failure and entrepreneurial intent in Singapore. Journal of Career Development, 43(4), pp.319-334.
Eckbo, B.E., Thorburn, K.S. and Wang, W., 2016. How costly is corporate bankruptcy for the CEO?. Journal of Financial Economics, 121(1), pp.210-229.
Golden, S.W., 2017. The Delaware of Asia. American Bankruptcy Institute Journal, 36(8), p.24.
Ibrahim, W.A.B., 2016. Regulatory framework for adjudicators in the Malaysian construction industry (Doctoral dissertation, University of Strathclyde).
Jayasinghe, H.M. and Ramachandra, T., 2015. Adjudication practice and its enforceability in the Sri Lankan construction industry. Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 8(1), p.C4515005.
Mewomo, M. and Maritz, M., 2017. The experts’ views on factors influencing the effective implementation of statutory adjudication. Journal of Construction Project Management and Innovation, 7(Supplement 1), pp.1877-1892.
Peng, M.W., Yamakawa, Y. and Lee, S.H., 2010. Bankruptcy Laws and Entrepreneur?Friendliness. Entrepreneurship Theory and Practice, 34(3), pp.517-530.
Raji, B.A., Mohamed, A.A.B.A. and Mohammed, N.S., 2017. STATUTORY ADJUDICATION: A GLOBAL TREND FOR RESOLUTION OF PAYMENT PROBLEMS IN CONSTRUCTION INDUSTRY. [email protected] 2017 Ahmad Ibrahim Kulliyyah of Laws International Islamic University Malaysia Kuala Lumpur, p.419.
Saba, H. and Rahman, S., 2016. A Comparative Analysis of Cross-Border Insolvency Proceedings between United Kingdom and Singapore. Bocconi Legal Papers, 8, p.131.
Todd, N. and Ezeani, E.C., 2016. Adjudication costs under the Housing Grants, Construction and Regeneration Act 1996: the attractions of Singapore’s Building and Construction Industry Security of Payment Act 2004
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
