{"id":72,"date":"2026-10-30T04:35:35","date_gmt":"2026-10-30T04:35:35","guid":{"rendered":"https:\/\/legal.sg\/?docs=corporate-and-commercial\/insolvency"},"modified":"2026-10-30T12:09:22","modified_gmt":"2026-10-30T12:09:22","slug":"insolvency","status":"publish","type":"docs","link":"https:\/\/legal.sg\/?docs=corporate-and-commercial\/insolvency","title":{"rendered":"Insolvency"},"content":{"rendered":"\n

<\/p>\n\n\n\n

Liquidation = how assets are collected\/sold to pay debts. <\/p>\n\n\n\n

Liquidation strives to fairly distribute among creditors and members and terminate company’s existence when winding up is over. <\/p>\n\n\n\n

Key legislation: IRDA and the Companies Act<\/p>\n\n\n\n

Process of commencing winding up<\/strong><\/p>\n\n\n\n

Insolvency, Restructuring and Dissolution Act 2018<\/u><\/strong> Commencement of winding up<\/strong>
126.\u2014(1)\u00a0 In any case where, before the making of a winding up application, a resolution has been passed by the company for voluntary winding up \u2014
(a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the winding up of the company is deemed to have commenced at the time of the passing of the resolution; <\/strong>and (b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 unless the Court on proof of fraud or mistake thinks fit otherwise to direct, <\/strong>all proceedings taken in the voluntary winding up are deemed to have been validly taken. \u00a0

(2)\u00a0 In any other case, the winding up is deemed to have commenced at the time of the making of the application for the winding up<\/strong>. \u00a0 <\/mark><\/em>

Provisional liquidator and commencement of voluntary winding up<\/strong>
161.\u2014(1)\u00a0 Where the directors of a company have made and lodged with the Official Receiver a statutory declaration in the prescribed form, and have lodged a declaration in the prescribed form with the Registrar of Companies \u2014
(a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 that the company cannot by reason of its liabilities<\/strong> continue its business; and<\/strong>
(b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 that meetings of the company and of its creditors have been summoned for a date within 30 days after the date of the declaration,
the directors must immediately appoint a licensed insolvency practitioner <\/strong>to be the provisional<\/strong> liquidator. \u00a0
<\/mark>
(2)\u00a0 Subject to section 171, a provisional liquidator has and may exercise all the functions and powers of a liquidator in a creditors\u2019 winding up, subject to such limitations and restrictions as may be prescribed by regulations. \u00a0

(3)\u00a0 The appointment of a provisional liquidator under this section continues<\/strong> for 30 days after the date of the appointment of the provisional liquidator, or<\/strong> for such further period as the Official Receiver may allow in any particular case, or<\/strong> until the appointment of a liquidator, whichever first occurs. \u00a0

(4)\u00a0 Notice of the appointment <\/strong>of a provisional liquidator under this section, together with a copy of the statutory declaration lodged with the Official Receiver under subsection (1), must be advertised, within 14 days<\/strong> after the appointment of the provisional liquidator, in the Gazette and at least one English local daily newspaper. \u00a0
(5)\u00a0 A provisional liquidator is entitled to receive such salary or remuneration by way of percentage or otherwise as is prescribed. \u00a0
(6)\u00a0 A voluntary winding up commences \u2014
(a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 where a provisional liquidator has been appointed before the resolution for voluntary winding up was passed, at the time when the declaration mentioned in subsection (1) was lodged with the Registrar of Companies; or
(b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 in any other case, at the time of the passing of the resolution for voluntary winding up.<\/mark><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

<\/p>\n\n\n\n

Voluntary Winding Up (not the focus of syllabus)<\/h1>\n\n\n\n

BY MEMBERS = solvent liquidation, where company expects to be able to pay its debts in full withint 12 months<\/h2>\n\n\n\n

(usually this means enough assets to also distribute to shareholders of the company)<\/p>\n\n\n\n

<\/p>\n\n\n\n

BY CREDITORS =Insolvent liquidation, unable to pay debts<\/h2>\n\n\n\n
    \n
  • Creditors have a right to choose liquidator of the company<\/li>\n\n\n\n
  • See: IRDA Division 3, part 8 | Companies Act Division 3, Part 10 <\/li>\n<\/ul>\n\n\n\n

    <\/p>\n\n\n\n

    COMPULSORY Liquidation by the Court<\/h1>\n\n\n\n

    Locus standi:<\/p>\n\n\n\n

      \n
    • A company, whether or not it is being wound up voluntarily, may be wound up by court order on application by one or more persons (Section 124 of IRDA). <\/li>\n\n\n\n
    • A creditor<\/strong> has locus standi to make such an application: Section 124(1)(c) IRDA; Section 253(1)(b) CA<\/li>\n\n\n\n
    • \u201cCreditor\u201d includes a prospective or contingent creditor<\/strong>, which is \u201ca person towards whom, under an existing obligation, the company may or will become subject to a present liability to pay a sum of money on the happening of some future event or at some future date\u201d: Re People\u2019s Parkway Development Pte Ltd<\/em> [1991] 2 SLR(R) 576<\/li>\n<\/ul>\n\n\n\n

      3.2.      Court\u2019s Discretion<\/h2>\n\n\n\n

      The Court retains the discretion not to wind up the company even if it is unable to pay its debts, or to adjourn the hearing to give the company time to settle the debt on which the winding up application is based on.<\/p>\n\n\n\n

      Insolvency, Restructuring and Dissolution Act 2018, Section 128<\/u><\/strong>
      (1)\u00a0 On hearing a winding up application, the Court may dismiss<\/u><\/strong> the application with or without costs or adjourn the hearing conditionally or unconditionally or make any interim or other order that the Court thinks fit, but the Court must not refuse to make a winding up order on the ground only that<\/strong> \u2014
      (a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the assets of the company have been mortgaged to an amount equal to or in excess of those assets;
      (b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the company has no assets; or
      (c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 in the case of an application by a contributory, there will be no assets available for distribution amongst the contributories. \u00a0

      (2)\u00a0 The Court may, on the winding up application coming on for hearing or at any time on the application of the person making the winding up application, the company, or any person who has given notice that he or she intends to appear on the hearing of the winding up application \u2014
      (a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 direct that any notices be given or any steps be taken before or after the hearing of the winding up application;
      (b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 dispense with any notices being given or steps being taken which are required by this Act, or by any prior order of the Court;
      (c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 direct that oral evidence be taken on the winding up application or any matter relating to the winding up application; (d)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 direct a speedy hearing or trial of the winding up application or any issue or matter;
      (e)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 allow the winding up application to be amended or withdrawn; and
      (f)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 give such directions as to the proceedings as the Court thinks fit. \u00a0

      (3)\u00a0 Where the winding up application is made on the ground of default in lodging the statutory report or in holding the statutory meeting, the Court may, instead of making a winding up order, direct that the statutory report must be lodged or that a meeting must be held, and may order the costs to be paid by any persons who, in the opinion of the Court, are responsible for the default.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

      Public interest elements will be considered by the Court: BNP Paribas v Jurong Shipyard Pte Ltd<\/em> [2009] 2 SLR(R) 949 at [19].<\/p>\n\n\n\n

        \n
      • For example, a commercially viable company may have other social and economic interests, such as those of its employees, non-petitioning creditors, suppliers, customers, and even shareholders to take into account.<\/li>\n<\/ul>\n\n\n\n

        <\/p>\n\n\n\n

        Test for insolvency; inability to pay debts <\/h2>\n\n\n\n

        The Company’s inability to pay debts is the most common ground to compulsorily wound up a company (s 125(1)(e) IRDA; s 254(1)(e) CA).<\/p>\n\n\n\n

        A company is deemed <\/strong>(i.e. presumed) to be unable to pay its debt if: 1. Fail statutory demand; 2. fail to satisfy execution\/process issued on a judgment or any court order in favour of a creditor; 3. prove to satisfaction of the Court that Company is unable to pay its debts.<\/p>\n\n\n\n

          \n
        1. Failure to meet statutory demand: s 125(2)(a) IRDA; s 254(2(a) CA.<\/li>\n<\/ol>\n\n\n\n
            \n
          • Most common method<\/li>\n\n\n\n
          • A creditor to whom the company is indebted in a sum exceeding $15,000 may issue a statutory demand against the company and serve it at the registered office of the company.<\/li>\n\n\n\n
          • If, after 3 weeks after service of demand, the company neglects to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor, there is a presumption of insolvency.\n
              \n
            • The statutory demand must <\/strong>state that the company has the option to secure or compond a debt. IF NOT, the SD is at risk of being challenged on the basis of irregularity which could compromise any winding up application that may be filed against the company by the creditor: BNP Paribas v Jurong Shipyard [2009] SGCA 11<\/em><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

              2. Execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part )s 125(2)(b) IRDA; s 254(2)(b) CA)<\/p>\n\n\n\n

              <\/p>\n\n\n\n

              3. Proved to the Court’s satisfaction that the Company is unable to pay its debt (s 125(2)(c) IRDA; s 254(2)(c) CA), through the cashflow insolvency test (this is the only<\/mark><\/strong> applicable test under this). <\/p>\n\n\n\n

                \n
              • Cashflow insolvency test: whether current assets > current liabilities, such that able to meet all debts as and when they fall due within a 12-month timeframe<\/li>\n<\/ul>\n\n\n\n

                Where debt is undisputed, the Court would ordinarily direct the company be wound up: Metalform Asia Private Limited v Holland Leedon Private Limited<\/em> [2007] SGCA 6<\/p>\n\n\n\n

                  \n
                • If disputed, see next section<\/li>\n<\/ul>\n\n\n\n

                  <\/p>\n\n\n\n

                  DISPUTING A DEBT ON SUBSTANTIAL GROUNDS<\/h2>\n\n\n\n
                    \n
                  • Where the company has a bona fide claim of substance, the company may either seek to stay or dimiss the winding up application or file an injunction to prevent the creditor from proceeding to file a winding up application. \n
                      \n
                    • Typically seek an injunction PRIOR to filing for a winding up application. Because the filing of a winding up appication will cause chaos for the company, so a stay\/dismiss the application is not as good as a complete injunction to prevent the filing.\n
                        \n
                      • For example, if the company is part of a group. The filing of a winding up application may cause cross defaults under contracts entered into by other members of the group. <\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n\n\n\n
                      • In determining whether a substantial and bona fide dispute <\/strong>exists, generally, the applicable standard of proof is no more than that for resisting a summary judgment application. That is, the debtor company need only raise triable issues<\/strong> in order to obtain a stay or dismissal of the winding up application or alternatively, an injunction against the filing of a winding up application. <\/li>\n<\/ul>\n\n\n\n

                        PROCEDURE FOR COMPULSORY WINDING UP APPLICATION<\/h1>\n\n\n\n
                          \n
                        • 1. Application made by way Originating Summons (Originating Application*?) supported by Affidavit, served on the appropriate parties<\/li>\n\n\n\n
                        • 2. Advertisement to notify general public\n
                            \n
                          • At least once in an English local daily newspaper or in any other newspaper as directed by the court, as well as the government gazette.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
                          • 3. Deposit with Official Receiver\n
                              \n
                            • Before filing of the winding up application, a deposit of $10,400 or such other amount as may be prescribed from time to time must be paid to the official receiver.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
                            • 4. Notice of intention to appear and list of persons intending to appear at the hearing<\/li>\n<\/ul>\n\n\n\n

                              See Insolvency, Restructuring and Dissolution (Corporate Insolvency and Restructuring) Rules 2020 for more details on the procedure for winding up applications<\/p>\n\n\n\n

                              Effect of Winding Up<\/h2>\n\n\n\n
                                \n
                              • Upon filing of the winding up APPLICATION<\/span><\/strong>, the company or any creditor or contributory can apply to STAY further proceedings against the company in the interim period prior to the hearing of the winding up application: Section 129 of the IRDA (s 258 CA).\n
                                  \n
                                • It is not an automatic process; it must be applied for. <\/li>\n<\/ul>\n<\/li>\n\n\n\n
                                • Any disposition of coy property (including things in action, any transfer of shares or alteration of members’ status) made after COMMENCEMENT<\/span><\/strong> of winding up by the court is, unless the Court otherwise orders, void: <\/strong>Section 130(1) IRDA\n
                                    \n
                                  • things in action – intangible propery rights that can be enforced through legal action eg shares, debt, IP rights<\/li>\n<\/ul>\n<\/li>\n\n\n\n
                                  • Any attachment, sequestration, distress or enforcement order put in force against the estate or effects of the company after COMENCEMENT <\/span> <\/strong> of the winding up by the Cout is, unless the Court otherwise orders, void: Section 130(2) IRDA.<\/li>\n<\/ul>\n\n\n\n

                                    <\/p>\n\n\n\n

                                    Upon the making up of a winding up ORDER<\/span>,<\/strong> no action or proceeding shall be proceeded with or commenced against the company except with the leave of court and in accordance with such terms as the court imposes: s 133 IRDA.<\/p>\n\n\n\n

                                      \n
                                    • In addition, creditors cannot retian the benefit of uncompleted excution (s 206 IRDA)\n
                                        \n
                                      • e,g, if creditor commenced garnishing proceedings against a company to garnish funds in the coy bank account, if the garnishee order has not been made absolute, the creditor will not be able to take the benefit of the proceeds of execution.<\/li>\n\n\n\n
                                      • The rationale is to prserve assets of the coy for the general body of credits where possible. <\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

                                        <\/p>\n","protected":false},"excerpt":{"rendered":"

                                        Liquidation = how assets are collected\/sold to pay debts. Liquidation strives to fairly distribute among creditors and members and terminate company’s existence when winding up is over. Key legislation: IRDA and the Companies Act Process of commencing winding up Insolvency, Restructuring and Dissolution Act 2018 Commencement of winding up 126.\u2014(1)\u00a0 In any case where, before […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":52,"menu_order":3,"comment_status":"open","ping_status":"closed","template":"","doc_tag":[],"class_list":["post-72","docs","type-docs","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/legal.sg\/index.php?rest_route=\/wp\/v2\/docs\/72","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legal.sg\/index.php?rest_route=\/wp\/v2\/docs"}],"about":[{"href":"https:\/\/legal.sg\/index.php?rest_route=\/wp\/v2\/types\/docs"}],"author":[{"embeddable":true,"href":"https:\/\/legal.sg\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legal.sg\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=72"}],"version-history":[{"count":2,"href":"https:\/\/legal.sg\/index.php?rest_route=\/wp\/v2\/docs\/72\/revisions"}],"predecessor-version":[{"id":77,"href":"https:\/\/legal.sg\/index.php?rest_route=\/wp\/v2\/docs\/72\/revisions\/77"}],"up":[{"embeddable":true,"href":"https:\/\/legal.sg\/index.php?rest_route=\/wp\/v2\/docs\/52"}],"wp:attachment":[{"href":"https:\/\/legal.sg\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=72"}],"wp:term":[{"taxonomy":"doc_tag","embeddable":true,"href":"https:\/\/legal.sg\/index.php?rest_route=%2Fwp%2Fv2%2Fdoc_tag&post=72"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}