Temporary Relief for Financially Distressed Indivduals and Businesses
COVID-19 is an unexpected and unprecedented event which has adversely affected many economic sectors and individuals in Singapore.
The COVID-19 (Temporary Measures) Act 2020 (the “Act”) introduces relief for individuals and businesses in financial distress by temporarily: -
a. For individuals: Increasing the monetary threshold for bankruptcy from $15,000 to $60,000; and
b. For businesses: Increasing the monetary threshold for insolvency from $10,000 to $100,000.
c. Lengthening the statutory period for debtors to respond to a statutory demand from creditors to 6 months.
d. Relieving directors from their obligations to prevent their companies trading while insolvent if the debts are incurred in the company’s ordinary course of business. However, directors remain criminally liable if the debts are incurred fraudulently.
The relief in (a) – (c) above applies to all bankruptcy and insolvency applications made on or after the commencement of the Act on 20 April 2020. It is not necessary for the individual or business to show that he is unable to satisfy the debt due to COVID-19.
The relief period lasts for 6 months from 20 April to 19 October 2020. This gives individuals and businesses breathing space to sort out their finances without the threat of bankruptcy or insolvency proceedings.