Speech by Second Minister for Law, Finance & Education, Indranee Rajah, at the Workshop on Private Trustees in Bankruptcy
1. Hello everyone, and welcome to the Treasury. Some faces I recognize, and it’s very good to see you. This workshop on Private Trustees in Bankruptcy, or “PTIB” in short, is really intended to acquaint everyone with the new regime, and what you can do in it.
2. I hope you find this session informative and helpful in your decision to become a PTIB. Like in all training opportunities, this is, of course, another occasion to catch-up with colleagues in the industry and make new friends.
The Role of PTIBs
3. Let me be very honest. The main reason for this workshop is to encourage you to take up the appointment of a PTIB.
4. Just by way of background, MinLaw passed a number of amendments to the Bankruptcy Act in September 2015 which came into effect in August 2016. And one of the key amendments mandated that institutional creditors applicants nominate private trustees to administer the bankruptcy, and this extends to subsidiaries of institutional creditors. The rationale behind the change is to require institutional creditors who have sufficient resources and expertise to make credit assessments to take more responsibility for the administration of the bankrupt’s affairs.
5. In this fairly new bankruptcy ecosystem, you can play an important part in administering bankruptcy cases petitioned by institutional creditors. The current system is still in its infancy. By becoming a PTIB, you are helping to shape the industry of bankruptcy administration through your feedback and suggestions on how we can improve the system, as in fact some of you have already been doing.
State of the Industry Today
6. Since the amendments came into effect, we have observed that the number of new bankruptcies entering the system has been relatively steady.
7. In 2017, there were a total of 2,932 bankruptcy applications filed. Of these, 1,516 PTIBs were nominated to act as trustees. Every month, on average, about 130 bankruptcy applications are filed by institutional creditors, and at least 50 PTIB appointments are made by the Court.
8. MinLaw expects bankruptcy applications to continue at approximately this present pace. This translates into a stable stream of new cases routinely flowing into the system.
9. For the cases that have entered or will enter the system under this new regime, most will remain in the system between three to seven years before they become eligible for discharge. With at least 50 institutional creditor cases per month, and each case remaining in the system for three to seven years, this translates to somewhere between 1,800 to 4,200 active bankruptcy cases for PTIBs at any one time. With these figures, I am certain that you need no further persuasion to come onboard as a PTIB. This is a market opportunity that requires a relatively small early investment and requires only a fixed period of commitment.
Aims for the Session
10. So let me now touch on today’s programme for the workshop. The workshop is designed to help you find out more about being a PTIB specifically, what it entails, and the likely infrastructure required. This is really intended to demystify the work involved in being a PTIB.
11. The workshop begins with a presentation from an officer from the Official Assignee & Public Trustee’s Office. He will provide you with the salient features of the work of the PTIB. We have also arranged for two of the current PTIBs to share with you their respective experiences when they first took on the role including some of the challenges they faced and how they overcame them. After listening to them, you might be enthused to become a PTIB too!
12. As mentioned earlier, the current system is still in its infancy, and that we would like feedback on how it can be improved. We are serious about doing this better. So today’s session is not designed to be a “one-way” street. We want to better understand your apprehensions and reservations including the concerns you may have about the regulatory regime, entering a new industry, and the long term sustainability of the business, or indeed anything else that is on your mind about becoming a PTIB.
13. Even though the PTIB system is relatively new, we have already introduced refinements based on feedback. For example, we received feedback that the security deposit of $2,000 per bankrupt was a barrier to entry. This requirement made it difficult for smaller players to commit to bigger case loads.
14. So upon review, we amended the regulation with effect from 1 February 2018 to permit the provision of an insurance guarantee in lieu of a security deposit. That’s one example that we take your feedback seriously and act on it.
15. So in closing, I hope you leave today’s session with a clearer understanding of the work of a PTIB, and I hope you will be inspired to get involved as one. We look forward to partnering with you as we continue to refine our bankruptcy regime.
16. And on that note, I should also take the opportunity to thank the Insolvency Practitioners’ Association of Singapore, the Institute of Singapore Chartered Accountants and the Law Society for their continuing support of the PTIB initiative and for helping to make today’s event a fruitful one.
17. So thank you all very much, and we look forward to welcoming you as a PTIB.